MtGox withdrawal delays [Gathering]

[vayvanne]

[...]
I am sure that we can identify the stolen coins some day in the block chain. Let us work on this task in a constructive way.

They could be traced before another exchange/washing machine where they will be fiated or exchanged to other forks including anonymous ones. Community need the investigation but I see no movement to that direction. Does the japanese authorities need a direct claim to start investigate this epic theft?

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[bitcoinvest]

[...]
I am sure that we can identify the stolen coins some day in the block chain. Let us work on this task in a constructive way.

They could be traced before another exchange/washing machine where they will be fiated or exchanged to other forks including anonymous ones. Community need the investigation but I see no movement to that direction. Does the japanese authorities need a direct claim to start investigate this epic theft?

Japanese Goverment is supporting BITCOIN the way i see it and have to do something to clear the dirty clouds that Mark Karpeles left on the sky...
BUT!
as long as the "lost" bitcoins are not returning to the owners i think they loose points ...

as you said this is an EPIC THEFT.
What about the Bitcoin Foundation in cooperation with Japanese authorites? what do you think???

Because i think this way will find everything within a week....

[DrApricot]

[...]
I am sure that we can identify the stolen coins some day in the block chain. Let us work on this task in a constructive way.

Does the japanese authorities need a direct claim to start investigate this epic theft?

Japanese Goverment is supporting BITCOIN the way i see it and have to do something to clear the dirty clouds that Mark Karpeles left on the sky...
BUT!
as long as the "lost" bitcoins are not returning to the owners i think they loose points ...

as you said this is an EPIC THEFT.
What about the Bitcoin Foundation in cooperation with Japanese authorites? what do you think???

Because i think this way will find everything within a week....

True enough, and it would be great if the press could manage to pry something out on the police investigation. When there is a lack of any reporting, this creates the appearance of a cover-up, even when there can be very good reasons to keep things quiet.

Six months though is enough time to investigate any kind of fraud or theft. How about releasing some preliminary findings, and the addresses of the supposed rogue traders who made off with the bitcoins so the coins can be traced?

[freedombit]

[...]
I am sure that we can identify the stolen coins some day in the block chain. Let us work on this task in a constructive way.

Does the japanese authorities need a direct claim to start investigate this epic theft?

Japanese Goverment is supporting BITCOIN the way i see it and have to do something to clear the dirty clouds that Mark Karpeles left on the sky...
BUT!
as long as the "lost" bitcoins are not returning to the owners i think they loose points ...

as you said this is an EPIC THEFT.
What about the Bitcoin Foundation in cooperation with Japanese authorites? what do you think???

Because i think this way will find everything within a week....

True enough, and it would be great if the press could manage to pry something out on the police investigation. When there is a lack of any reporting, this creates the appearance of a cover-up, even when there can be very good reasons to keep things quiet.

Six months though is enough time to investigate any kind of fraud or theft. How about releasing some preliminary findings, and the addresses of the supposed rogue traders who made off with the bitcoins so the coins can be traced?

MtGox has the addresses to every Bitcoin they either lost or still have in their possession. By law, these addresses are now in the hands of the administrator, Nobuaki Kobayashi. If the Japanese police are actually investigating, they should have these addresses by now. SIX DAYS is enough time to do the research. There must be some sort of negotiation happening.

BTW - keep making noise: https://bitcointalk.org/index.php?topic=628191.0

[TheFootMan]

MtGox has the addresses to every Bitcoin they either lost or still have in their possession. By law, these addresses are now in the hands of the administrator, Nobuaki Kobayashi. If the Japanese police are actually investigating, they should have these addresses by now. SIX DAYS is enough time to do the research. There must be some sort of negotiation happening.

You stand correct, however, due to the inefficiency of any 'official investigation', you have to multiply it with the bureaucracy factor. This varies, depending on your jurisdiction. In the Japanese case, I would think the factor would amount to something like 40, so expect some kind of conclusion after about 8 months.

[JorgeStolfi]

[ ... ] What about the Bitcoin Foundation in cooperation with Japanese authorites? what do you think???
Because i think this way will find everything within a week....

True enough, and it would be great if the press could manage to pry something out on the police investigation. When there is a lack of any reporting, this creates the appearance of a cover-up, even when there can be very good reasons to keep things quiet.

Six months though is enough time to investigate any kind of fraud or theft. How about releasing some preliminary findings, and the addresses of the supposed rogue traders who made off with the bitcoins so the coins can be traced?

MtGox has the addresses to every Bitcoin they either lost or still have in their possession. By law, these addresses are now in the hands of the administrator, Nobuaki Kobayashi. If the Japanese police are actually investigating, they should have these addresses by now. SIX DAYS is enough time to do the research. There must be some sort of negotiation happening.

Well, we still have absolutely no clue as to what happened to those coins, not even when.   The only thing that seems fairly certain is that it was NOT an exploit of the malleability bug, as Mark claimed.  A study by some folks at MIT concluded that at most a couple hundred BTC could have been stolen that way, possibly none.

Knowing the blockchain addresses where the coins went to is only the first, relatively easy, step.  The real problem is identifying the owner of those addresses.  And by now the coins must have been throroughly mixed and scattered, so even if they are spent or sold it may be impossible to detect the operation and catch the thief.

before the heist, the coins must have moved many times for legitimate purposes (e.g. cold/hot wallet flow) while in MtGOX's possession.  Blockchain analysis cannot reveal when the chain of transactions stopped being MtGOX's housekeeping and became a theft.  For that the police will have to examine other logs, subpoena the internet providers for access logs, interrogate Mark and other workers, etc. 

It is quite possible, if not likely, that the heist was an inside job (i.e. an embezzlement rather than a theft), perhaps with accomplices among the staff workers, clients, and their friends.   If that is the case, it will take a lot of work to identify the culprits, determine their actions and roles, and collect evidence against them (bank records, phone calls, emails, skype logs, etc.)

It seems that many clients of MtGOX, even if not involved in the Great Heist, were using it for things that they would rather not have the police look at.  That is the declared reason of some (and, perhaps, the private reason of many others) for supporting the MtGOX revival projects by Sunlota nd others -- which make as much sense as digging up Nixon's corpse to enter him as Republican candidate for the US presidency. In particular, some clients support the revival because they hope (naively?) to use again their unverified accounts, which did not identify the owner.  Thus many clients would rather hinder the investigation than help it.

Charlie Shrem and Mark Karpelès were among the Founding Members of the Bitcoin Foundation.  Mark was eventually expelled, with visible reluctance, but Shrem (who may have used MtGOX for the "business" he is charged with) is still there, as well as several people which I would consider prime suspects in the case.

It is quite normal and apprpriate for the police to refuse giving out any information while an investigation is underway. 

[OhShei8e]

[...]
I am sure that we can identify the stolen coins some day in the block chain. Let us work on this task in a constructive way.

They could be traced before another exchange/washing machine where they will be fiated or exchanged to other forks including anonymous ones. Community need the investigation but I see no movement to that direction. Does the japanese authorities need a direct claim to start investigate this epic theft?

At the moment there is no system that can collect and process information about the stolen coins in a purposeful way. Do not expect any help from the authorities with this, rather we have to support them. Thus, first of all we have to do our homework. News from my side I'll send over the list:

https://www.olivere.de/mailman/listinfo/gox-self-help

[DrApricot]

[ ... ] What about the Bitcoin Foundation in cooperation with Japanese authorites? what do you think???
Because i think this way will find everything within a week....

Six months though is enough time to investigate any kind of fraud or theft. How about releasing some preliminary findings, and the addresses of the supposed rogue traders who made off with the bitcoins so the coins can be traced?

If the Japanese police are actually investigating, they should have these addresses by now. SIX DAYS is enough time to do the research. There must be some sort of negotiation happening.

Well, we still have absolutely no clue as to what happened to those coins, not even when.   The only thing that seems fairly certain is that it was NOT an exploit of the malleability bug, as Mark claimed.  A study by some folks at MIT concluded that at most a couple hundred BTC could have been stolen that way, possibly none.

All excellent points. The fact that this initial apparent fabrication about the "malleability bug" has been allowed to stand, more or less completely unchallenged for six months, when provably false has raised some doubts about the true nature of the "investigation". Were the perpetrator or instigator(s) already known to those in charge, or at least strongly suspected, then this could as much be a negotiation to establish terms for returning the coins as it is one of mere fact finding alone. Should there be any political or diplomatic fallout resulting from these deliberations, then this could be yet one further source of some delay--for example, were state supported hacking involved.

[bernard75]

https://www.olivere.de/mailman/listinfo/gox-self-help

Too bad my command line browser doesnt support images yet, but i certainly like your style.

[JorgeStolfi]

All excellent points. The fact that this initial apparent fabrication about the "malleability bug" has been allowed to stand, more or less completely unchallenged for six months, when provably false has raised some doubts about the true nature of the "investigation". Were the perpetrator or instigator(s) already known to those in charge, or at least strongly suspected, then this could as much be a negotiation to establish terms for returning the coins as it is one of mere fact finding alone. Should there be any political or diplomatic fallout resulting from these deliberations, then this could be yet one further source of some delay--for example, were state supported hacking involved.

The police will only investigate if someone makes a concrete accusation of a crime.  Clients would be hard-pressed do it while they don't even know whether the coins were really stolen (perhaps they never existed?) or when they were stolen.

My understanding is that the Japanese police was asked to start a criminal investigation only recently, at the request of Mr. Kobayashi, and for only a small part of the missing BTC (less than 30'000).  I imagine that he already found clear evidence of such a theft, but there may be more in the future.

I don't know of any other police investigation before that.  Perhaps clients did not care enough about catching and punishing the thief (or did not have enough information to file a complaint), and chose to do nothing or to file civil lawsuits only, which are now preempted by the bankruptcy process. 

Some US clients apparently had done a private investigation that resulted in evidence of criminal acts, but they only filed a civil lawsuit in the US and then retracted it to support the Sunlot proposal.

I understand that Mr. Kobayashi is doing a private investigation of his own (using external expert consultants for the technical aspects).  However his first concern is to understand MtGOX's accounting and evaluate the merits of the client's claims.  Given that the final situation of MtGOX and the clients' claims were the result of several years of intense trading, that alone is not an easy task.  Hopefully he will figure out enough about what happened to call for further police investigation.

[OhShei8e]

Too bad my command line browser doesnt support images yet

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[DrApricot]

All excellent points. The fact that this initial apparent fabrication about the "malleability bug" has been allowed to stand, more or less completely unchallenged for six months, when provably false has raised some doubts about the true nature of the "investigation".

The police will only investigate if someone makes a concrete accusation of a crime.  Clients would be hard-pressed do it while they don't even know whether the coins were really stolen (perhaps they never existed?) or when they were stolen.

My understanding is that the Japanese police was asked to start a criminal investigation only recently, at the request of Mr. Kobayashi, and for only a small part of the missing BTC (less than 30'000).  I imagine that he already found clear evidence of such a theft, but there may be more in the future.

I don't know of any other police investigation before that. 

I found this in an article dated April 16, 2014:

Amid calls for a criminal investigation, the company [Mt. Gox] said last month it had handed over documents to the Tokyo police, after it found 200,000 of the lost coins in a "cold wallet" -- a storage device, such as a memory stick, that is not connected to other computers. http://tuoitrenews.vn/business/19061/bitcoin-exchange-mtgox-in-administration-bankruptcy-eyed

It's probably safe to say that the Tokyo police were called in to investigate at a very early stage after the collapse. Why they waited until the end of July to declare it an "official" investigation is hard to say. Perhaps Kobayashi had something to do with it, but more than likely, it was merely done for some bureaucratic convenience.

The fact that they are investigating such a relatively small number (27,000) of the alleged 650,000 missing, may be an indication that Mt. Gox never held much more than those 200,000 found in the old-format wallet. The 650,000 number missing could have been a gross exaggeration due to either unintentional double counting or else possibly even intended deception by some parties unknown.

Mark Karpeles stated in a late June Wall Street Journal interview that "he doesn't believe more [than 200,000 coins] will be found." He sounded pretty sure. This might even explain Karpeles' seemingly blase attitude about the matter as displayed by his recent postings on reddit and twitter. Perhaps in his view, the case is solved. The bitcoins have been found, and now it is up to Kobayashi to take care of returning them to their rightful owners.

The endless delays and obfuscation in the bankruptcy proceeding could result from a blame game in which the responsibility for the mess gets shifted from one party to the next--in effect, a political hot potato.

If the true cause of the closure was a freeze up of funds at Mt. Gox's banks and not missing bitcoins, it could well explain why there has been a reluctance to date to come forward with any explanation.

[JorgeStolfi]

The police will only investigate if someone makes a concrete accusation of a crime.  Clients would be hard-pressed do it while they don't even know whether the coins were really stolen (perhaps they never existed?) or when they were stolen.

My understanding is that the Japanese police was asked to start a criminal investigation only recently, at the request of Mr. Kobayashi, and for only a small part of the missing BTC (less than 30'000).  I imagine that he already found clear evidence of such a theft, but there may be more in the future.

I don't know of any other police investigation before that. 

I found this in an article dated April 16, 2014:

Amid calls for a criminal investigation, the company [Mt. Gox] said last month it had handed over documents to the Tokyo police, after it found 200,000 of the lost coins in a "cold wallet" -- a storage device, such as a memory stick, that is not connected to other computers. http://tuoitrenews.vn/business/19061/bitcoin-exchange-mtgox-in-administration-bankruptcy-eyed

It's probably safe to say that the Tokyo police were called in to investigate at a very early stage after the collapse.

I don't pretend to understand what has happened any more than anyone else.  But note that the April story is Mark reporting the theft (or reacting to someone else's complaint) to the police.  Presumably he told the police that it was the malleability hack, and the police naturally could not do anything from that, and just archived the complaint.

Actually, those news report that Mark said that he handed over documents to the police.  Mark said many other things, though...

I would guess that the new investigation is unrelated to that April filing, and is based on clear evidence uncovered by Kobayashi's investigation of the MtGOX books.  I hope that more will come.

[JorgeStolfi]

One important question that I have yet to see answered is how the claims are to be computed.

Many clients seem to assume that the amount they can claim is simply the BTC and currency balances in their MtGOX account, by the time the site was shut down (or at some earlier date).

However, some people who claim to be familiar with bankruptcy cases have claimed that the standard procedure in such cases is to ignore the balances (which are fictitious anyway, since they are the result of trading coins and money that did not exist), and define a client's claim instead as being only the amounts he deposited minus the amounts he withdrew, summed over all time, converting BTC to JPY by the market price at the moment of deposit or withdrawal.

Obviously the two methods will give very different results.  A client who has a huge claim under one interpretation may be excluded under the other, and vice-versa.

Was any information offered recently about which method will be followed by Mr. Kobayashi?

[DrApricot]

One important question that I have yet to see answered is how the claims are to be computed.

Many clients seem to assume that the amount they can claim is simply the BTC and currency balances in their MtGOX account, by the time the site was shut down (or at some earlier date).

However, some people who claim to be familiar with bankruptcy cases have claimed that the standard procedure in such cases is to ignore the balances (which are fictitious anyway, since they are the result of trading coins and money that did not exist), and define a client's claim instead as being only the amounts he deposited minus the amounts he withdrew, summed over all time, converting BTC to JPY by the market price at the moment of deposit or withdrawal.

Obviously the two methods will give very different results.  A client who has a huge claim under one interpretation may be excluded under the other, and vice-versa.

Was any information offered recently about which method will be followed by Mr. Kobayashi?

I can see the merit of this means of accounting were it a proven fact that Mt. Gox was running a fractional reserve. However, if there never were more than the 200,000 or so coins currently admitted to have been found in the old-format wallet, then all trades were actually based on "real" coins and never fake ones.

Many of these kinds of issues could be resolved merely by releasing the addresses of the alleged rouge traders or whomsoever supposedly made off with bitcoins from Mt. Gox. Then customers can trace them for themselves and see what happened.

Also, I'm curious how the bankruptcy court would deal with bitcoinbuilder's claims? Gox/btc were auctioned off and transferred to him in exchange for withdrawing real btc through his web site. Would these Gox/btc that he holds be considered "real"? Since no new coins were ever deposited to Mt. Gox by bitcoinbuilder, then it would appear under this procedure that virtually all his claims are void and so are those of his clients.

[JorgeStolfi]

One important question that I have yet to see answered is how the claims are to be computed.

Many clients seem to assume that the amount they can claim is simply the BTC and currency balances in their MtGOX account, by the time the site was shut down (or at some earlier date).

However, some people who claim to be familiar with bankruptcy cases have claimed that the standard procedure in such cases is to ignore the balances (which are fictitious anyway, since they are the result of trading coins and money that did not exist), and define a client's claim instead as being only the amounts he deposited minus the amounts he withdrew, summed over all time, converting BTC to JPY by the market price at the moment of deposit or withdrawal.

Obviously the two methods will give very different results.  A client who has a huge claim under one interpretation may be excluded under the other, and vice-versa.

Was any information offered recently about which method will be followed by Mr. Kobayashi?

I can see the merit of this means of accounting were it a proven fact that Mt. Gox was running a fractional reserve. However, if there never were more than the 200,000 or so coins currently admitted to have been found in the old-format wallet, then all trades were actually based on "real" coins and never fake ones.

There are philosophical argumens for and against both methods of counting claims, and of course each client will find one of them fair.  The question is which one will Mr. Kobayashi use.   Some people claim what he has no choice given the laws and precedents, some claim that he may choose either one.

Since there have been no comments about this issue (and surely there will be, whatever the choice), It seems that either no one thought of asking that question at the meeting, or it was asked and he refused to answer.

Also, I'm curious how the bankruptcy court would deal with bitcoinbuilder's claims? Gox/btc were auctioned off and transferred to him in exchange for withdrawing real btc through his web site. Would these Gox/btc that he holds be considered "real"? Since no new coins were ever deposited to Mt. Gox by bitcoinbuilder, then it would appear under this procedure that virtually all his claims are void and so are those of his clients.

If bitcoinbuilder's CEO believes that he is the current legal owner of some GOXCoins, because he bought the rights to them off-exchange from MtGOX clients, I suppose that he should  submit a claim with proof of those purchases, and it will be evaluated like the other claims.  Under one interpretation, I suppose that he would claim to be the rightful owner of a certain number of BTC in the balances of those clients' MtGOX's accounts.  Under the other interpretation, he would claim to be entitled to (some fraction of) whatever those clients deposited, minus whatever they withdrew, over their history at MtGOX.

[OhShei8e]

One important question that I have yet to see answered is how the claims are to be computed.

Many clients seem to assume that the amount they can claim is simply the BTC and currency balances in their MtGOX account, by the time the site was shut down (or at some earlier date).

However, some people who claim to be familiar with bankruptcy cases have claimed that the standard procedure in such cases is to ignore the balances (which are fictitious anyway, since they are the result of trading coins and money that did not exist), and define a client's claim instead as being only the amounts he deposited minus the amounts he withdrew, summed over all time, converting BTC to JPY by the market price at the moment of deposit or withdrawal.

Obviously the two methods will give very different results.  A client who has a huge claim under one interpretation may be excluded under the other, and vice-versa.

Was any information offered recently about which method will be followed by Mr. Kobayashi?

No, nothing, so far as I know. We have already discussed this point on Gox Self-help some time ago. It has been shown that probably a majority favor the "last balance" solution. This also fits well with your assessment. We had agreed so far:

"The remaining assets in Bitcoins should be distributed to creditors
proportionately to their final Bitcoin balance (as seen on mtgox.com).
The remaining assets in legal currency (FIAT) should be distributed to
creditors proportionately to their final currency balance (as seen on
mtgox.com)."

https://wiki.olivere.de/goxwiki/ClaimsGoxSelfHelp
(Auth needed)

There are a lot pro and cons but overall - I think - every other solution would be much more complicated and would be perceived as unfair by the most people. That will not fly by. People want the 200,000 coins divided fair. People want there money and Bitcoin is money.  

I had my Bitcoins almost two years on Gox. I was a Newbie and Gox was my wallet. I was happy with Gox, because they had very early a Yubikey and a very good HMAC based API. And they were big. And they were organized in the Bitcoin Foundation, were I'm also became a lifetime member. So I felt save even if I had only little knowledge about Bitcoin in this time. Gox gave me a feeling of guaranty in an uncertain environment. Sure, I was naive. So I lost nearly 200 coins. Nearly all I had. Gox was simply my main wallet. By trading and some panic (yes, I was a lousy trader) I had even lost coins. However, not much, maybe 20%. But that was completely okay for me, because it was really my fault and I've learned a lot from it about myself and about trading. In FIAT currency I have lost nothing. I think many have a similar position. But the lost Bitcoins hurt me very much. I'll fight like a tiger for my coins. You'll see.

[JorgeStolfi]

We have already discussed this point on Gox Self-help some time ago. It has been shown that probably a majority favor the "last balance" solution. This also fits well with your assessment. We had agreed so far:

"The remaining assets in Bitcoins should be distributed to creditors
proportionately to their final Bitcoin balance (as seen on mtgox.com).
The remaining assets in legal currency (FIAT) should be distributed to
creditors proportionately to their final currency balance (as seen on
mtgox.com)."

https://wiki.olivere.de/goxwiki/ClaimsGoxSelfHelp
(Auth needed)

There are a lot pro and cons but overall - I think - every other solution would be much more complicated and would be perceived as unfair by the most people. That will not fly by. People want the 200,000 coins divided fair. People want there money and Bitcoin is money.

The problem is that the client's opinion may not be relevant, if there are laws/precedents that determine how claims are assessed.  If the law says to use method X, and one client tells Kobayashi that he prefers method X, it will almost certainly be method X.  Even if all clients say that they prefer method Y, Kobayashy may say, "sorry, I must follow the law and use method X; thereafter you get together and re-distribute the spoils among yurselves as you like".

That question should be posed to Japanese bankruptcy lawyers and/or to Mt. Kobayashi.  Didn't any clients retain Japanese lawyers to advise/represent them at the meeting?

[gonzx]

"A día de hoy no se sabe el porcentaje de recuperación, como tampoco se sabe la forma en la que se devolverán las cantidades (dinero de curso legal o BTC). Con todo, hay que tener en cuenta que la ley japonesa obliga a la devolución en yenes, aunque el Juez respondió que dadas las peculiaridades del caso quizás se pueda realizar de otra forma."

Google translate:

"Today is not the recovery rate is known, nor the way in which the quantities (legal tender or BTC) is known be returned. However, keep in mind that Japanese law compels the return yen, although the judge responded that given the peculiarities of the case perhaps can be made otherwise."

http://afectadosmtgox.blogspot.com.ar/

[JorgeStolfi]

"Today is not the recovery rate is known, nor the way in which the quantities (legal tender or BTC) is known be returned. However, keep in mind that Japanese law compels the return yen, although the judge responded that given the peculiarities of the case perhaps can be made otherwise."

http://afectadosmtgox.blogspot.com.ar/

I saw that detail in several other posts.  However I believe that he actually said something closer to "we may look into it".  But in Japanese culture (the old-fashioned one at least)  a flat-out "no" is considered too rude, and that phrase could be just a polite way of avoiding to say "we do not intend to" (which would probably have elicited some angry responses from the crowd).

Anyway, that is not the question I asked.  The question is how the claims of each client are to be computed: by the balances in the final MtGOX ledger, or by deposits minus withdawals.  Whether the recovered amounts are returned in BTC or yen is an independent decision.

From the point of the courts, using the MtGOX ledger seems dicey.  One problem is that there may be no way to ensure that the ledger has not been tampered with, or even that the accounts belong to the claimants.  Whereas, the money deposits and withdrawals can be certified by the banks, and those in BTC can be partially verified in the blockchain.