The US Govt stole your coins - not MtGox

[cryptoanarchist]

Just because governments sometimes do bad things, it does not mean that all bad things are done by governments.

No shit Sherlock.  And who is saying this?

On any given thread in Bitcointalk, the probability that at somepoint someone will blame the government for any problem they have ever encountered approaches 100%.

and the probability that a govt troll will chime in is actually at 100%. Why don't you go play in traffic? Welcome to ignore-land.

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[renfr]

Just because governments sometimes do bad things, it does not mean that all bad things are done by governments.

No shit Sherlock.  And who is saying this?

On any given thread in Bitcointalk, the probability that at somepoint someone will blame the government for any problem they have ever encountered approaches 100%.

Says the paid gov shill

[ninjarobot]

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-affairs

I 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).

[cryptoanarchist]

I would not be surprised if the FEDs have turned MtGox into a giant honeypot since then.

Being somewhat familiar with how the US government operates, I put this at about a 99% probability. Its why I moved all my coins out of Gox back in early 2012. Late 2011/early 2012 was about the time that the US started really sticking its dick into everything bitcoin- especially Gox.

[itsunderstood]

[...]

I 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)

[...]

Certainly that is their MO.

[tvbcof]

...
I could be wrong (and most likely am).

A hypothesis along these lines strikes me as being as strong as any.  I, however, think it most likely that the Coinlab deal was supposed to result in the historic customer activity data landing in the Fed's laps and the retribution for this not happening took place immediately afterwards and was highly effective.  Thus, Mt. Gox has been acting as a honey-pot since the beginning of 2013 rather than the end.  And the Feds have all the data that Mt. Gox kept which is probably a lot.

It seems very unlikely to me that the cold funds were stolen in an ordinary manner since there is no way Karpeles is that stupid and careless, and pretty much inconceivable that they were drained in anything but trivial amounts by the malleability issues.

I'de put the hypothesis tree as so:

 - Mark has lost control of the BTC through extortion
   - by criminals
   - by state actors

 - Mark has lost control through very sophisticated zero-day means (e.g., hardware backdoors.)  This would imply state level action.

 - Mark has control of the coins but is floating a story of some vague theft story to avoid giving up control.

 - Mark has ceded control to a friendly entity do stage a theft for similar reasons.

 - Mark thinks he can get away with simply stealing the BTC and the theft is staged or bogus.

An interesting (and bothersome) thing about having law enforcement work in a covert and secret manner is that it short-circuites all of the traditional justice systems of the U.S.  If information or actions (e.g., stealing/appropriating the BTC) is carried out in a covert manner than it becomes very cumbersome to act on it in public without giving away the methods.

I would not rule out that Mark and the U.S. authorities are working hand-in-glove to invent a story of theft as a means of diverting attention and analysis of the methods that the authorities are employing as they relate to Bitcoin.  For the whole year Marks assertion that he simply cannot talk about certain fairly basic things has been highly awkward.  It literally screams 'gag order.'

===

Edit:  One more perfectly viable hypothesis which I forgot to mention:

  - Mark did in fact simply lose access to some cold wallet keys.

I say this because it is actually damn difficult to come up with a scheme which limits loss due to extortion.  I've put many hours into figuring out how to mitigate this threat, and I control nowhere near the BTC that Mark does so his threat surface here is much larger.  Not only that, but a scheme which is subject to loss of keys has the utility of providing a level of plausible deniability which can go a long way towards helping solve certain kinds of problems.

[itsunderstood]

...
I could be wrong (and most likely am).

A hypothesis along these lines strikes me as being as strong as any.  I, however, think it most likely that the Coinlab deal was supposed to result in the historic customer activity data landing in the Fed's laps and the retribution for this not happening took place immediately afterwards and was highly effective.  Thus, Mt. Gox has been acting as a honey-pot since the beginning of 2013 rather than the end.  And the Feds have all the data that Mt. Gox kept which is probably a lot.

It seems very unlikely to me that the cold funds were stolen in an ordinary manner since there is no way Karpeles is that stupid and careless, and pretty much inconceivable that they were drained in anything but trivial amounts by the malleability issues.

I'de put the hypothesis tree as so:

 - Mark has lost control of the BTC through extortion
   - by criminals
   - by state actors

 - Mark has lost control through very sophisticated zero-day means (e.g., hardware backdoors.)  This would imply state level action.

 - Mark has control of the coins but is floating a story of some vague theft story to avoid giving up control.

 - Mark has ceded control to a friendly entity do stage a theft for similar reasons.

 - Mark thinks he can get away with simply stealing the BTC and the theft is staged or bogus.

An interesting (and bothersome) thing about having law enforcement work in a covert and secret manner is that it short-circuites all of the traditional justice systems of the U.S.  If information or actions (e.g., stealing/appropriating the BTC) is carried out in a covert manner than it becomes very cumbersome to act on it in public without giving away the methods.

I would not rule out that Mark and the U.S. authorities are working hand-in-glove to invent a story of theft as a means of diverting attention and analysis of the methods that the authorities are employing as they relate to Bitcoin.  For the whole year Marks assertion that he simply cannot talk about certain fairly basic things has been highly awkward.  It literally screams 'gag order.'

Powerful analysis, you got a good brain there.

+1 Internets.

[itsunderstood]

^^^ Also the analysis above does cast an interesting question mark over the pending litigation in terms of Gox?

Wait, there is a legal term for that which means "I rest on pending legal cases not yet decided" or something like that, it is a legal maxim which people can avoid speaking or acting or can free themselves based on pending litigation cases that are not yet decided.  Basically only when the referred-to case is decided, can a chrage then be levied against that party. 

And since the FBI probably is in between Gox and its counterparties due to SR wallet stealing of their doing, its basically up to the FBI to decide the future of BTC, it seems, on one of these logic paths.

I only crack my legal library when it gets really interesting and I may have to go find this phrase I am thinking of, in regards to pending litigation being an out for present crimes.

[TechieCFO]

Please try not to speculate.
Its just a post.

the likelihood its a lie or misinformed is 50/50

the likelihood its the truth or misinformed is 50/50

Truth is perception, in the end. Unless you do
your homework.

Please DO try to speculate.  There is nothing wrong with a hypothesis that turns out to be incorrect.

The scientific method involves brainstrorming for a wide variety of hypotheses, then knocking out the hypotheses which do not stand to the evidence as it comes in.

Modern science has come very far very fast on the strength of this method of exploration.  Religion and politics have stagnated and look about the same as they have for the past several thousand years because they mainly reject these methods.

Most importantly, do your own thinking.  Most posters here just state some (usually absurd) assertion as though it were fact.  That's because there are a lot of imbeciles and youngsters around these parts.  In Bitcoinland doing your own analysis can make you rich...or at least help you to not get ripped off.

Over 99.99% of the people on this blog do not have access to the facts regarding Mt. Gox. Including you. So all that speculation is based on hot air and is worthless. Even if someone states exactly what happened, no-one here can vouch it (its just a lucky hit) In science, everyone shares the so called facts and results, so speculation about what they mean works because some people already have the experience to know.

Am I Black or White? You have the same chance to determine this as a monkey. Same with people who don't have facts about Mt. Gox.

[thelema93]

If Japanese Government finds out this was a US black op, maybe they can refund the coins!!!
I mean Bitcoin is after all a secret project of the Japanese Government to take over global finance.

[tvbcof]

Please DO try to speculate.  There is nothing wrong with a hypothesis that turns out to be incorrect.

The scientific method involves brainstrorming for a wide variety of hypotheses, then knocking out the hypotheses which do not stand to the evidence as it comes in.

Modern science has come very far very fast on the strength of this method of exploration.  Religion and politics have stagnated and look about the same as they have for the past several thousand years because they mainly reject these methods.

Most importantly, do your own thinking.  Most posters here just state some (usually absurd) assertion as though it were fact.  That's because there are a lot of imbeciles and youngsters around these parts.  In Bitcoinland doing your own analysis can make you rich...or at least help you to not get ripped off.

Over 99.99% of the people on this blog do not have access to the facts regarding Mt. Gox. Including you. So all that speculation is based on hot air and is worthless. Even if someone states exactly what happened, no-one here can vouch it (its just a lucky hit) In science, everyone shares the so called facts and results, so speculation about what they mean works because some people already have the experience to know.

Am I Black or White? You have the same chance to determine this as a monkey. Same with people who don't have facts about Mt. Gox.

Bull.  There are a great number of facts.  For instance, it's a stone cold fact that Mark claimed he could not talk about what was happening for about a year now.  This does not prove that he was under a gag order, but it, like thousands of other known facts, can be applied toward strengthening or weakening a number of varying hypothesis...or can by people who are not lazy and/or stupid.

Another thing that is a fact is that Mt. Gox closed their web site and people cannot log in.  Certain of the hypothesis I've been entertaining predicted this.  I got all my records from them a long time ago for this reason.

You are, I believe, confused between a 'fact' and a 'synthesis'.  That is, a pre-canned complete series of answers about what is going on.  Lacking the latter should NOT constitute some sort of a barrier which precludes other deductive analysis.

Again, someone who lacks the analytical abilities or comfort level in doing this kind of work may be better off just sitting at idle to see what comes up.  That's fine, but it doesn't mean that everyone should.  In this case, those who can do analysis might very well walk away with the money from those who cannot in their pockets.  That's how the world works unfortunately.  Case in point is that I took my BTC out of Mt. Gox back in August 2013.  I took a calculated risk on a wire as I closed down with them, but only what I could easily afford to lose, and also because it provided a toe-hold for future potential projects.

[BITCOIN-PIZZA-DAY]

http://hackingdistributed.com/2014/03/01/what-did-not-happen-at-mtgox/


2014-02-20 10:40<MagicalTux> le gouv. US veut pas qu'on disclose hein | The US government doesn't want us to disclose
02-25-2014 EST [12:04] <MagicalTux> Well, technically speaking it's not "lost" just yet, just temporarily unavailable
03-02 <MagicalTux> we are not at liberty to discuss details with anyone else than law enforcement

This is a white lie. He can't discuss the issue with anyone else besides LE not because they are working for the customers to get stolen coins back but to investigate against customers who did illicit transactions with SR.

There are 3 reasons why they did this:
1. Identify customers who bought at SR (Back in 2011 Gox was used by many people to get into bitcoin just for SR) http://imgur.com/NUolxDg from http://cseweb.ucsd.edu/~smeiklejohn/files/imc13.pdf
2. Tax information. 2011, 2012 and now 2013 probably didn't include a lot of bitcoin capital gains.
3. Get more intel to prevent future illicit use.

[Bit_Happy]

...
We have been talking on the forum (theoretically) about the NSA being able to break private keys...

Private keys are secure or we are SOL.

[hgamezoom]

This theory, more or less, makes some sense than " Stolen by hacker".