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Author Topic: Mt. Gox Knew It Was Selling Phantom Bitcoin 2 Weeks Before Collapse  (Read 5446 times)
nmtrader100 (OP)
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March 18, 2014, 04:17:55 PM
 #1

http://yro.slashdot.org/story/14/03/13/1854244/mt-gox-knew-it-was-selling-phantom-bitcoin-2-weeks-before-collapse

"Mt. Gox CEO Mark Karpeles wrote in a sworn declaration in the company's U.S. bankruptcy filing he suspected hundreds of thousands of bitcoins were missing on Feb. 7, more than two weeks before it finally halted trading. That means Mt. Gox allowed its customers to continue trading, knowing that its bitcoin stash was wiped out and collecting as much as US$900,000 in trading fees. Since Mt. Gox said it was also missing $27.3 million in cash from customer deposits, it raises the possibility that customers — despite seeing a cash balance displayed in their account — might have actually been buying bitcoins that did not exist, with cash that was already long gone."

http://www.computerworld.com/s/article/9246921/Mt._Gox_kept_exchange_open_despite_knowledge_of_large_scale_theft

IDG News Service - Mt. Gox may have collected a large sum in trading fees in the weeks before its closure, even though it was already aware that a vast number of bitcoins had gone missing, its U.S. bankruptcy filing suggests.

A sworn declaration in the filing from Robert Marie Mark Karpeles, Mt. Gox 's CEO, reveals that the Bitcoin exchange knew in early February that its situation was far graver than it had disclosed at the time.

Mt. Gox halted bitcoin withdrawals from its exchange on Feb. 7. It told customers it was investigating possible fraud due to a security issue called transaction malleability, but did not specify at the time how many bitcoins were missing. Buying and selling on the exchange continued until Feb. 25, when its website went dark.

Mt. Gox's first disclosure of the scale of its problems came when it filed for bankruptcy protection in Tokyo District Court three days later, saying 750,000 of its customers' bitcoins were missing, along with 100,000 of its own.

It appears from the U.S. bankruptcy filing that Mt. Gox executives knew the gravity of the company's losses up to 19 days before its public disclosure, but gave traders no reason at the time to believe the exchange might not be solvent.

In the filing, Karpeles states that the withdrawals were halted Feb. 7 due to "the theft or disappearance of hundreds of thousands of bitcoins owned by Mt. Gox customers as well as Mt. Gox itself."

Why Mt. Gox continued to operate the exchange with that knowledge is unclear.

Karpeles did not respond to a request for comment for this article sent to his personal email address.

The impact of Mt. Gox allowing customers to buy and sell bitcoins it suspected it did not have may be revealed by class-action lawsuits, one of which was filed in Chicago on Feb. 27, and another of which is planned in the U.K.

"They took trading fees on assets which didn't exist and accepted deposits when they knew they were insolvent," Aaron G., a Bitcoin investor who did not want his last name used, said via email.A

"The origin of the losses may or may not be incompetence," added Aaron, who has filed a fraud complaint against Mt. Gox with Tokyo police. "But they knew for at least two weeks and kept operating as normal."

After Feb. 7, Mt. Gox was still processing thousands of trades a day, according to Bitcoincharts.com, which records trading volumes for many Bitcoin markets.

An average of 49,912 bitcoins were traded daily on Mt. Gox between Feb. 7 and Feb. 25, at an average weighted price of $380.54 per bitcoin.
LiteCoinGuy
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March 18, 2014, 04:24:26 PM
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yep! of course. and thats only the tip of the iceberg. he is a fat dirty liar since years.

jonald_fyookball
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March 18, 2014, 04:25:51 PM
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Only 2 weeks??

nmtrader100 (OP)
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March 18, 2014, 04:26:30 PM
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http://www.markkarpelesdeathwatch.com/
nmtrader100 (OP)
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March 18, 2014, 04:31:10 PM
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There were substantial withdrawals during this time.  The reason he continued to operate was so that "certain individuals" could liquidate and get out.  We have not seen any record of exactly what BTC and USD withdrawals took place after the hack or how much they were for.  Also, Gox was already short USD before the hack even took place.  I have not heard a whisper about any of this so far during the bankruptcy proceedings.  Is anyone showing up to contest this mess???
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March 18, 2014, 05:00:34 PM
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his bad coding "may" explain the "possibility" that malleability caused "some" losses.

but 740k of coins, no way

and the malleability does not have anything to do with FIAT loses. so i look forward to how he tries to explain his way out of stealing the fiat


I DO NOT TRADE OR ACT AS ESCROW ON THIS FORUM EVER.
Please do your own research & respect what is written here as both opinion & information gleaned from experience. many people replying with insults but no on-topic content substance, automatically are 'facepalmed' and yawned at
IrishFutbol
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March 18, 2014, 05:13:17 PM
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The article is borderline lying.  Read the actual bankruptcy filing, and it states that while the theft occurred on the 7th, they didn't discover it until the 24th.

While they may have known sooner, the "anonymous email sources" are not telling the truth about what Mt. Gox stated in their filing.
5thStreetResearch
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March 18, 2014, 05:20:00 PM
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Full Tilt Poker was crediting player accounts with deposits without taking the money from their bank accounts for about three months before they went down.  Pretty damn similar to whats going on here.

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March 18, 2014, 05:23:51 PM
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yep! of course. and thats only the tip of the iceberg. he is a fat dirty liar since years.
QFT. I can't believe anyone is at all surprised by this, it was just so fucking blatant!

Remember Aaron Swartz, a 26 year old computer scientist who died defending the free flow of information.
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March 18, 2014, 05:29:29 PM
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The article is borderline lying.  Read the actual bankruptcy filing, and it states that while the theft occurred on the 7th, they didn't discover it until the 24th.

While they may have known sooner, the "anonymous email sources" are not telling the truth about what Mt. Gox stated in their filing.
+1 Why do people believe an unnamed source without even checking his/her facts? It must be related to not believing a credible source that differs from their opinion.  Let's just keep our pants on and wait for the trial. You can't just spew crap in a courtroom. Every statement will be checked out and if not true, punishments will be handed down.

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Free bitcoin in ? - Stay tuned for this years Bitcoin hunt!
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March 18, 2014, 05:54:10 PM
Last edit: March 18, 2014, 06:05:45 PM by 7Priest7
 #11

Some random person uses bitcoin to hire somebody to assassinate Mark Karpeles.

He made his bed. I'm sure that more than one criminal organization has used bitcoin for money laundering/etc.

Let us take bets on when they make their move against him?
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March 18, 2014, 05:56:16 PM
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This means fraud and jail time for him. This will make a lot of people happy  Smiley
nmtrader100 (OP)
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March 18, 2014, 06:24:15 PM
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That still doesn't account for the withdrawals that occurred after the hack was announced.  Certain people got their money out.

IrishFutbol
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March 18, 2014, 06:43:29 PM
 #14

That still doesn't account for the withdrawals that occurred after the hack was announced.  Certain people got their money out.



Still a very far cry from what your article suggests.  This isn't exactly a professional who knew what they were doing, and there's a big difference between negligence and fraud.
alfabitcoin
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March 18, 2014, 08:11:58 PM
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That still doesn't account for the withdrawals that occurred after the hack was announced.  Certain people got their money out.



Still a very far cry from what your article suggests.  This isn't exactly a professional who knew what they were doing, and there's a big difference between negligence and fraud.

I am curious, how would you define Mark's transfer of assets (bitcoinfoundation.org) to the Bitcoin foundation on Feb 23, 2014 while he was filing for bankruptcy protection?
Domain is under mark personal name not mtgox who filled bankruptcy protection.
alfabitcoin
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March 18, 2014, 08:42:51 PM
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I am not sure, but tibanne did not filled bunkruptcy, only mtgox kk has. Surpevisor would know it and mark would be in violation.
alfabitcoin
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March 18, 2014, 08:49:12 PM
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Iam not sure but think tibanne did not filled for bankruptcy, only mtgox k.k.

I just googled this link.
http://www.pcworld.com/article/2109240/after-bankruptcy-filings-fallen-mt-gox-exchange-lets-users-see-bitcoin-balances.html

They say Mtgox and parent company are involved in the bankruptcy. There are probably many other links referring to this as well.


That freeze was from us court meant for assets from US and due investigation of fraud. Japan bankruptcy filled only mtgox.
alfabitcoin
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March 18, 2014, 09:08:36 PM
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Here is another link that claims Tibanne Co. Ltd filed for bankruptcy in Japan on Feb. 28, 2014.
http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=137710719
Well i dont know. It seem that tibanne transfered domain ownership prior filling for bankruptcy.
Iam on your side, dont get me wrong, i lost a lot on mtgox. There is a difference between knowing owner of domain and btc, unfortunatelly.
alfabitcoin
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March 18, 2014, 09:14:08 PM
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Here is another link that claims Tibanne Co. Ltd filed for bankruptcy in Japan on Feb. 28, 2014.
http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=137710719
Well i dont know. It seem that tibanne transfered domain ownership prior filling for bankruptcy.
Iam on your side, dont get me wrong, i lost a lot on mtgox. There is a difference between knowing owner of domain and btc, unfortunatelly.

You cannot transfer assets  while you are filing bankruptcy. If the domain was transferred a year ago then yeah, but a few days before the filing bankruptcy, no.


Agan not sure, however court acceptance count not a date when filling were made.
Beside one thing is bankruptcy and other civi rehabitilation what mtgox has.

Edit
It would be usefull for exact link with court docs. And we do not know anything reagrding domain tranfers as we are not creditors of tibanne.
alfabitcoin
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March 18, 2014, 09:24:57 PM
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Here is another link that claims Tibanne Co. Ltd filed for bankruptcy in Japan on Feb. 28, 2014.
http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=137710719
Well i dont know. It seem that tibanne transfered domain ownership prior filling for bankruptcy.
Iam on your side, dont get me wrong, i lost a lot on mtgox. There is a difference between knowing owner of domain and btc, unfortunatelly.

You cannot transfer assets  while you are filing bankruptcy. If the domain was transferred a year ago then yeah, but a few days before the filing bankruptcy, no.


Agan not sure, however court acceptance count not a date when filling were made.
Beside one thing is bankruptcy and other civi rehabitilation what mtgox has.

The court orders in Japan explicitly state that he cannot transfer any assets.
Imagine what would happen if everyone filing for bankruptcy was allowed to transfer all their assets to a family member or friend the day before they filed. They walk into court and say they had a million dollars yesterday, but as of today I have nothing so I owe nothing. Does it make any sense that it would work that way?
Mtgox creditors (we) does not have anything with tibanne. Domain transfer could be possibly under court supervision. Again, that has nothing with mtgox victims. Can you find doc regarding tibanne fillings? Not news articles please.
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