Cold storage cleared out becuase of leak in hot wallet... Explain

[bennybong]

Can anyone explain how this would work? Is the hot wallet topped up with funds from cold storage automatically or something?
 

[usabitcoinbuyer]

Stupidity.

[deed02392]

That sounds like the only reasonable explanation, but then I'd argue the cold storage wasn't cold at all.

Cold storage in my eyes means an offline store of the private key for all the 'cold stored' coins, which require manually importing to a machine and then extracting from into the hot wallet.

Unless of course that's exactly what they were doing, but were topping up the hot wallet without realising there was a leak.

[bennybong]

That sounds like the only reasonable explanation, but then I'd argue the cold storage wasn't cold at all.

Cold storage in my eyes means an offline store of the private key for all the 'cold stored' coins, which require manually importing to a machine and then extracting from into the hot wallet.

Unless of course that's exactly what they were doing, but were topping up the hot wallet without realising there was a leak.

So whatever way you look at it, it comes down to pure incompetence and stupidity. I think everyone can agree on that fact!

[studio1one]

I don't see it. I just don't see how you could hemorrhage 750K coins without noticing, no matter how crap your systems are. I mean, there must have been some kind of vague check and balance going on and somewhere, somehow this must have come to light before it got to 750K coins.

[MaxwellsDemon]

Unless of course that's exactly what they were doing, but were topping up the hot wallet without realising there was a leak.

If you believe the leaked report, they lost almost 750,000 bitcoins, and now they only have 2000 left.
That means they moved 99.7% of their cold storage into the hot wallet without noticing there was a leak.
Just an everyday mistake...

[TheFootMan]

I don't see it. I just don't see how you could hemorrhage 750K coins without noticing, no matter how crap your systems are. I mean, there must have been some kind of vague check and balance going on and somewhere, somehow this must have come to light before it got to 750K coins.

In their Counterclaims MtGox and Tibanne are requesting that the Court, among other things, adjudge and declare that the Agreement is void  ab initio and unenforceable in light of CoinLab's failure to be properly registered and licensed; and, in light of the rescission of it, toorder CoinLab to return to MtGox all benefits that CoinLab received under the Agreement,including the amounts of USD $62,258.70, CAD $ 40.00 and 1428.81263537 Bitcoins.

Source:
http://www.scribd.com/doc/168032447/Mt-Gox-Filing

So they had control here in sept 2013, but didn't have an overview of total btc's lost otherwise. Yeah, right...

[Thylacine]

Agree - if it's topped up automatically it's not really cold storage right?

Cold storage to me means effectively off-line. If it's automatically topping up, then it's literally an extension of the hot wallet. Attackers clear out the hot wallet, wait for the top up batch to run, repeat.

I would hope that's not what happened, but who knows.

[max.]

Who could believe something from Mtgox.

The easiest way to get people money is to tell everybody that they get hacked.

The mtgox owners will be very rich after this, if you want to follow the money follow the mtgox owners.

 

[jubalix]

if this is true I thought it meant that the ewer manually taking btw out of their cold storage to meet BTC payouts, as a lot of BTC was being lost from their hot wallet....which when you write it down....DOES NOT MAKE SENSE
you would just manually send withdraws....and not top of the defective hot wallet...I suppose the volumes would kiil it though....

I really doubt gox has BTC though

[LRCGROUP]

True cold storage would mean they would have had to setup clean systems and generate a wallet addresses only for that machine and its retrospective customer, ensuring that this clean machine never had or would have a network connection to the net.  

My conspiracy theory:

Since I doubt Mt Gox was buying hardware and operating systems to ensure utmost security, they cut corners and probably were using esx and working with snapshots.  Which really was not cold storage because the esx server was online, making it easy for them to open the network bridge to pass the transactions.  
 

[Thedomone15]

Yes it makes absolutely no sense whatsoever.  Bitcoins in cold storage don't just disappear.  They have had to be stolen if they are truly gone, in this case.

I still don't trust that amateurish crisis documement that was "leaked".

[TheFootMan]

Yes it makes absolutely no sense whatsoever.  Bitcoins in cold storage don't just disappear.  They have had to be stolen if they are truly gone.

I still don't trust that amateurish crisis documement that was "leaked".

It was a hoax:


https://bitcointalk.org/index.php?topic=486528.0

[Mageant]

I don't understand how they could lose 750,000 BTC over years and not notice it.

I mean, wouldn't they check their totals like once every few months or so at least?