Mt. Gox coins laundered through BTC-e (Breaking details)

[ebliever]

http://blog.wizsec.jp/2017/07/breaking-open-mtgox-1.html

"We won't beat around the bush with it: Vinnik is our chief suspect for involvement in the MtGox theft (or the laundering of the proceeds thereof). This is the result of years of patient work, and these findings were surely independently uncovered by other investigators as well. Everyone who worked on the case have patiently kept quiet while forwarding findings to law enforcement, so as not to tip suspects off and to maximize the chances of arrests."

[1715091214]

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[d3t0x]

It will be interesting to see if he was just the seller or the actual hacker himself.

[Lutpin]

Depositing funds stolen from Mt. Gox right back into gox, now that's a rather bold move.

[ebliever]

Depositing funds stolen from Mt. Gox right back into gox, now that's a rather bold move.

 I agree. This report tends to exonerate Mark Karpeles of the thefts, but also reinforces my perception of him as clueless as to what was going on in his own operation.

[HabBear]

It will be interesting to see if he was just the seller or the actual hacker himself.

From the article: To be clear, this investigation turned up evidence to identify Vinnik not as a hacker/thief but as a money launderer;


This story now has the plot line for a Hollywood movie! Hacking, theft, double spending, money laundering, Russian on the lamb in some sleepy town on a Greek island. Let's cast Anna Chapman as Vinnick's dame and start shopping this thing to studios!

In addition, the shared keypool of the wallet.dat file lead to address reuse, which confused MtGox's systems into mistakenly interpreting some of the thief's spending as deposits, crediting multiple user accounts with large sums of BTC and causing MtGox's numbers to go further out of balance by about 40,000 BTC. None of these users seem to have reported their "sudden luck".

I wonder who among us benefited from the 40,000 BTC credits. I suppose if it was due to address reuse the people who would have benefited were those that were stolen from to begin with, no?

The graphic illustrating the bitcoin traffic is impressive, if Vinnick had used a chip mixer...and not returned to the "scene of the crime" they probably never would have caught him.

[countryfree]

BTC-e should be accused of money laundering. If what the article says is true, some 300,000 BTC were deposited at this exchange. That is huge! What about KYC regulations? If someone comes up with 300,000 BTC, this should raise alarm!

[CryptoBoomers]

It's like the movie office space, he missed a decimal and got way too big for his own good.

[Turner77]

 

It's like the movie office space, he missed a decimal and got way too big for his own good.

Peter Gibbons: [Explaining the plan] Alright so when the sub routine compounds the interest is uses all these extra decimal places that just get rounded off. So we simplified the whole thing, we rounded them all down, drop the remainder into an account we opened.
Joanna: [Confused] So you're stealing?
Peter Gibbons: Ah no, you don't understand. It's very complicated. It's uh it's aggregate, so I'm talking about fractions of a penny here. And over time they add up to a lot.
Joanna: Oh okay. So you're gonna be making a lot of money, right?
Peter Gibbons: Yeah.
Joanna: Right. It's not yours?
Peter Gibbons: Well it becomes ours.
Joanna: How is that not stealing?
Peter Gibbons: [pauses] I don't think I'm explaining this very well.
Joanna: Okay.
Peter Gibbons: Um... the 7-11. You take a penny from the tray, right?
Joanna: From the cripple children?
Peter Gibbons: No that's the jar. I'm talking about the tray. You know the pennies that are for everybody?
Joanna: Oh for everybody. Okay.
Peter Gibbons: Well those are whole pennies, right? I'm just talking about fractions of a penny here. But we do it from a much bigger tray and we do it a couple a million times.

[darkangel11]

Depositing funds stolen from Mt. Gox right back into gox, now that's a rather bold move.

 I agree. This report tends to exonerate Mark Karpeles of the thefts, but also reinforces my perception of him as clueless as to what was going on in his own operation.

He did his part. Karpeles was using money deposited on GOX to finance his expensive lifestyle, renting apartments, hookers, and such. Let's not make a saint out of him.
I believe he wasn't clueless, but ignorant. He thought his system is secure and never bothered to monitor the balances. Also, he didn't give his employees access to cold storage, so nobody could check how much they actually have and compare to API balances.

[CryptoBoomers]

It's like the movie office space, he missed a decimal and got way too big for his own good.

Peter Gibbons: [Explaining the plan] Alright so when the sub routine compounds the interest is uses all these extra decimal places that just get rounded off. So we simplified the whole thing, we rounded them all down, drop the remainder into an account we opened.
Joanna: [Confused] So you're stealing?
Peter Gibbons: Ah no, you don't understand. It's very complicated. It's uh it's aggregate, so I'm talking about fractions of a penny here. And over time they add up to a lot.
Joanna: Oh okay. So you're gonna be making a lot of money, right?
Peter Gibbons: Yeah.
Joanna: Right. It's not yours?
Peter Gibbons: Well it becomes ours.
Joanna: How is that not stealing?
Peter Gibbons: [pauses] I don't think I'm explaining this very well.
Joanna: Okay.
Peter Gibbons: Um... the 7-11. You take a penny from the tray, right?
Joanna: From the cripple children?
Peter Gibbons: No that's the jar. I'm talking about the tray. You know the pennies that are for everybody?
Joanna: Oh for everybody. Okay.
Peter Gibbons: Well those are whole pennies, right? I'm just talking about fractions of a penny here. But we do it from a much bigger tray and we do it a couple a million times.

"If you could just.... launder this money..... thaaaat would be greeeeeaaaaat...."

[Turner77]

"And you don't need to worry about doing a TPS report on this one."

[The Sceptical Chymist]

Depositing funds stolen from Mt. Gox right back into gox, now that's a rather bold move.

No kidding,  eh?  But crypto scumbags are known for their blatant psychopathy and cast iron balls.  Would not surprise me in the least.  I swear the  Mt. Gox stain is never going to wash off.  It's become an integral part of bitcoin's history and it'll still be a topic of discussion in 2042.  You mark my words.  I'll be dead then, but feel free to quote this.

[dothebeats]

Depositing funds stolen from Mt. Gox right back into gox, now that's a rather bold move.

 I agree. This report tends to exonerate Mark Karpeles of the thefts, but also reinforces my perception of him as clueless as to what was going on in his own operation.

He did his part. Karpeles was using money deposited on GOX to finance his expensive lifestyle, renting apartments, hookers, and such. Let's not make a saint out of him.
I believe he wasn't clueless, but ignorant. He thought his system is secure and never bothered to monitor the balances. Also, he didn't give his employees access to cold storage, so nobody could check how much they actually have and compare to API balances.

So giving his employees access to the cold storage would make significant difference, no? Karpeles is a dick, sure. He is ignorant of what is going on inside his exchange ergo the supposed "hack" of Gox. But handling out control over the cold storage to his employees would have been a dumb move since he would have handed the money up for grabs to some other people with their motives unknown to him.

[d3t0x]

Depositing funds stolen from Mt. Gox right back into gox, now that's a rather bold move.

 I agree. This report tends to exonerate Mark Karpeles of the thefts, but also reinforces my perception of him as clueless as to what was going on in his own operation.

Hmm, still very interesting either way. Following weeks should reveal much more.

Will mtGox customers finally get their BTC balances returned? Imagine the value now, they forced everyone to hodl since 2013...

[Vishnu.Reang]

Feeling sad about all this. BTC-e was one of the most trusted exchanges out there. It was one of the oldest as well, being established in 2011. And more importantly, it was perhaps the only major exchange which doesn't ask for ID verification.

[shayshaylaboogie]

Depositing funds stolen from Mt. Gox right back into gox, now that's a rather bold move.

 I agree. This report tends to exonerate Mark Karpeles of the thefts, but also reinforces my perception of him as clueless as to what was going on in his own operation.

He did his part. Karpeles was using money deposited on GOX to finance his expensive lifestyle, renting apartments, hookers, and such. Let's not make a saint out of him.
I believe he wasn't clueless, but ignorant. He thought his system is secure and never bothered to monitor the balances. Also, he didn't give his employees access to cold storage, so nobody could check how much they actually have and compare to API balances.

So giving his employees access to the cold storage would make significant difference, no? Karpeles is a dick, sure. He is ignorant of what is going on inside his exchange ergo the supposed "hack" of Gox. But handling out control over the cold storage to his employees would have been a dumb move since he would have handed the money up for grabs to some other people with their motives unknown to him.

This is what I'm saying, he had to at least be complicit in the theft, at least according to these latest details. If they emptied out massive amounts of bitcoin multiple times (that's what I got from the report), how did they not see this, and why did they keep using the compromised wallets? Especially of the case of coins going straight from GOX to BTCE and sitting, there has to be a link in all this, or both platforms were so negligent that it was criminal

[dennyd999]

More likely Vinnik was the one who helped to clean stolen Bitcoins from Mt.Gox (read he bought Bitcoins cheap from dirty hands), but not the one who drained Mt.Gox wallet.

But we still can not trust FBI for sure. They said us that he is the one and they have some proofs according to Bitcoin trace records.
For sure FBI will not open technique with what they trace Bitcoins and court need to belive them blindly. They will just show some drawings etc. etc..

Offcourse if Vinnik will be extradicted , he will be guilty by US court decision and I have no reason  to trust US courts at all.




All this is bullshit.

Hopefully Greece will not extradict him. Its not a Thailand , there was precidents before when Greece declined extradiction to states.

[dennyd999]

The graphic illustrating the bitcoin traffic is impressive, if Vinnick had used a chip mixer...and not returned to the "scene of the crime" they probably never would have caught him.

Dude I hope that you realise that based only on this beautifully created graphic we can not say that Vinnik is guilty.

And FBI will operate only with this drawings..Saying that opening the Bitcoin Trace Technology is Top Secret and Court will be presued to belive THIS Vector Grafic drawing.


I can draw a lot more vectors if you wish..


Its nothing..I never belived any of them. FBI is dirty structure they probably busted Alphabay ,Hansa and BTC-E because was declined to receive bribe from admins..

[Taras]

Is it possible that Bitmixer's decision to shut down was related to this case? Like they knew before everyone else? Maybe either they were involved or the revelation makes them less confident in the ability to "wash" coins, like their shutdown announcement declared.

I'm also wondering if the recent darknet market shutdowns provided the last clues to make this arrest, like a bunch of dominoes.

[lorylore]

Depositing funds stolen from Mt. Gox right back into gox, now that's a rather bold move.

 I agree. This report tends to exonerate Mark Karpeles of the thefts, but also reinforces my perception of him as clueless as to what was going on in his own operation.

Hmm, still very interesting either way. Following weeks should reveal much more.

Will mtGox customers finally get their BTC balances returned? Imagine the value now, they forced everyone to hodl since 2013...

I dont know the btc will be return to the customers or not. It is now in different hands of people. The american maybe will confiscate and take it for themselves. And even if the btc is return, i think you will only get a fraction of the original amount. But at least it is better than nothing.

[hatshepsut93]

Is it possible that Bitmixer's decision to shut down was related to this case? Like they knew before everyone else? Maybe either they were involved or the revelation makes them less confident in the ability to "wash" coins, like their shutdown announcement declared.

I'm also wondering if the recent darknet market shutdowns provided the last clues to make this arrest, like a bunch of dominoes.

Either it's a very big coincidence, or there's is some connection. Maybe Bitmixer was used by BTC-E or AlphaBay owners, or maybe Bitmixer just saw the upcoming crackdowns and decided to quit and hide before someone gets to them. And I hope that they will be ok, because mixing itself shouldn't be illegal. I wonder if all this shitstorm will spark interest in altcoins like XMR, DASH and ZEC, as well as some new solutions for Bitcoin privacy.

[AlphaTrade]

Is it possible that Bitmixer's decision to shut down was related to this case? Like they knew before everyone else? Maybe either they were involved or the revelation makes them less confident in the ability to "wash" coins, like their shutdown announcement declared.

I'm also wondering if the recent darknet market shutdowns provided the last clues to make this arrest, like a bunch of dominoes.

I think your close to the truth there.. I think the two are inextricably linked.

[Vishnu.Reang]

Is it possible that Bitmixer's decision to shut down was related to this case? Like they knew before everyone else? Maybe either they were involved or the revelation makes them less confident in the ability to "wash" coins, like their shutdown announcement declared.

Oh god.. It all makes sense now. Bitmixer was also run by a Russian guy, right? I am afraid that something very bad is going to happen with Bitcoin now. I still remember how the prices crashed after the news about Mt Gox scandal came out in 2014. The same may happen now.

[lighpulsar07]

Oh that was very big news and a bad news for BTC-e customers for now it is still unknown if BTC-e comes back or not.
also on the other hand, for the mt. gox users this is a good news if proven, will mt. gox return all the bitcoins back to it's customers or they will get compensation? well this interesting news will still develop in following weeks.

[CryptoBoomers]

^ @Vishnu, I don't think so.

Back in the day, there was only a few exchanges, so when a big one went down it killed the BTC price (gox/cryptsy). Now there are so many exchanges, and more and more of them are doing things with compliance that btc-e volume isn't really that big anymore and the market doesn't take nearly as much of a hit when one goes down.

 This was actually a big considering factor for me to get back into the crypto scene "once there are 20 or so exchanges things will be safer...". They still aren't 'safe' but as a market the price volatility isn't as easily affected anymore by one org.

[IdVerification]

I agree but it appears that Bitcoin continues to influence the rest of the cryptocurrency market to a significant degree. As we've seen in the past few weeks, uncertainty for Bitcoin translates to uncertainty for cryptocurrency (and vice versa).

[Vishnu.Reang]

^ @Vishnu, I don't think so.

Back in the day, there was only a few exchanges, so when a big one went down it killed the BTC price (gox/cryptsy). Now there are so many exchanges, and more and more of them are doing things with compliance that btc-e volume isn't really that big anymore and the market doesn't take nearly as much of a hit when one goes down.

 This was actually a big considering factor for me to get back into the crypto scene "once there are 20 or so exchanges things will be safer...". They still aren't 'safe' but as a market the price volatility isn't as easily affected anymore by one org.

I hope that is the case now. But the exchange rates are already down by around 5%, ever since BTC-e went offline. As the news about the arrest spreads, I think that it will go down even further. The mainstream media is going to pick up this story.

[chip1994]

I agree but it appears that Bitcoin continues to influence the rest of the cryptocurrency market to a significant degree. As we've seen in the past few weeks, uncertainty for Bitcoin translates to uncertainty for cryptocurrency (and vice versa).

Because every trend on the market are follow the status from Bitcoin (represent for crypto world) and when Bitcoin have problem, altcoin will crashing too. I think not have any altcoin can replace Bitcoin if next time the price of Bitcoin comeback to range $1500-$1200, so don't believe Ethereum or other altcoin can helps you keep safe your money. FIAT is best place at now.

[CryptoBoomers]

^ @Vishnu, I don't think so.

Back in the day, there was only a few exchanges, so when a big one went down it killed the BTC price (gox/cryptsy). Now there are so many exchanges, and more and more of them are doing things with compliance that btc-e volume isn't really that big anymore and the market doesn't take nearly as much of a hit when one goes down.

 This was actually a big considering factor for me to get back into the crypto scene "once there are 20 or so exchanges things will be safer...". They still aren't 'safe' but as a market the price volatility isn't as easily affected anymore by one org.

I hope that is the case now. But the exchange rates are already down by around 5%, ever since BTC-e went offline. As the news about the arrest spreads, I think that it will go down even further. The mainstream media is going to pick up this story.

I think this compounds the Aug1 event a bit but glad this all happened before it not shortly after. This is the crypto world, expect the unexpected and often times things are backwards (aka I wouldn't be surprised if BTC shot up just before Aug1 vs shot down).

[ipanks]

I agree but it appears that Bitcoin continues to influence the rest of the cryptocurrency market to a significant degree. As we've seen in the past few weeks, uncertainty for Bitcoin translates to uncertainty for cryptocurrency (and vice versa).

Because every trend on the market are follow the status from Bitcoin (represent for crypto world) and when Bitcoin have problem, altcoin will crashing too. I think not have any altcoin can replace Bitcoin if next time the price of Bitcoin comeback to range $1500-$1200, so don't believe Ethereum or other altcoin can helps you keep safe your money. FIAT is best place at now.

i am thinking the same as you. its because until now bitcoin is still be the leader of altcoin and always be. we can take a look in yesterday when bitcoin reach $18xx-$19xx, altcoin is crashed like you said but then fortunately bitcoin can recover until now and altcoin is trying to follow bitcoin too.

[ebliever]

Is it possible that Bitmixer's decision to shut down was related to this case? Like they knew before everyone else? Maybe either they were involved or the revelation makes them less confident in the ability to "wash" coins, like their shutdown announcement declared.

Oh god.. It all makes sense now. Bitmixer was also run by a Russian guy, right? I am afraid that something very bad is going to happen with Bitcoin now. I still remember how the prices crashed after the news about Mt Gox scandal came out in 2014. The same may happen now.

This is total speculation on my part, but I wonder if the BitMixer operator was picked up a few days ago, and wound up making a bargain with law enforcement - either reduced charges or immunity in return for becoming an informant and providing the information leading to Vinnik's arrest? And part of the deal was to shut down the mixer, if this is what happened.

[sammrheza]

so are we can get back  all funds that stolen from mt gox and btc-e soon ? it will be hurt if we loose our money again and again....

[danherbias07]

Depositing funds stolen from Mt. Gox right back into gox, now that's a rather bold move.

No kidding,  eh?  But crypto scumbags are known for their blatant psychopathy and cast iron balls.  Would not surprise me in the least.  I swear the  Mt. Gox stain is never going to wash off.  It's become an integral part of bitcoin's history and it'll still be a topic of discussion in 2042.  You mark my words.  I'll be dead then, but feel free to quote this.

A huge stain that cannot be erased and will be passed on generations of the people that will talk here.
Maybe our sons and daughters or our grandchildren. They are not the backbone of bitcoin but they made it ache like hell.
They should have been in the pinned post. 

[Celebrity]

It will be interesting to see if he was just the seller or the actual hacker himself.

For mt. gox case, I don't think there were hackers or a hacker. It was a pure inside job that was done by the mt. gox company workers. They just drained customer's wallet. If the news are consistent, btc-e workers also have connection to mt. gox company.

[exstasie]

Depositing funds stolen from Mt. Gox right back into gox, now that's a rather bold move.

Maybe Vinnik (or whoever, in the case that he is innocent), knew that Karpeles was long unaware of the theft. After all, Gox continued to deposit into the compromised addresses for years. I think there was still no KYC on Gox at the time.

[joebrook]

http://blog.wizsec.jp/2017/07/breaking-open-mtgox-1.html

"We won't beat around the bush with it: Vinnik is our chief suspect for involvement in the MtGox theft (or the laundering of the proceeds thereof). This is the result of years of patient work, and these findings were surely independently uncovered by other investigators as well. Everyone who worked on the case have patiently kept quiet while forwarding findings to law enforcement, so as not to tip suspects off and to maximize the chances of arrests."

According to the investigators it seems that Vinnik himself was the one who orchestrated the entire hacking and theft of Mt Gox bitcoins, and it was the investigations of the theft that allowed the FBI to seize Vinnik and stop his nefarious activities.

[peter0425]

It will be interesting to see if he was just the seller or the actual hacker himself.

For mt. gox case, I don't think there were hackers or a hacker. It was a pure inside job that was done by the mt. gox company workers. They just drained customer's wallet. If the news are consistent, btc-e workers also have connection to mt. gox company.

From the looks of it, Mark also knew that something is wrong it Mt. Gox but he didn't do anything. He just let someone suck all the funds in that exchange before crying that it was hacked.

It will be interesting to see if he was just the seller or the actual hacker himself.

For mt. gox case, I don't think there were hackers or a hacker. It was a pure inside job that was done by the mt. gox company workers. They just drained customer's wallet. If the news are consistent, btc-e workers also have connection to mt. gox company.

This is what the authorities have found out. Funds from Mt. Gox is going to BTC-e and they are trying to chain together on what really happens to Mt. Gox funds. Where it went and who actually benefited from it. Maybe they have enough evidence linking Vinnik to the hacks coin from Mt. Gox that's why they have arrested him.

[Hydrogen]

Feeling sad about all this. BTC-e was one of the most trusted exchanges out there. It was one of the oldest as well, being established in 2011. And more importantly, it was perhaps the only major exchange which doesn't ask for ID verification.

I've been thinking about this, wondering if btc-e was targeted for its no ID policy. Or perhaps it was targeted for being a russian enterprise with relations between the USA and russia being bad right now. If Vinnik is held for years the way Julian Assange has been with no forthcoming evidence of his guilt. That will be depressing. In the united states, the legal precedent should be: innocent until proven guilty. The media shouldn't have the right to suggest people like Vinnik are guilty without presenting valid evidence.

[Lucky7btc]