To Bitstamp: Gox's coins are being sold on your exchange

[Aquent]

   

    Hello Nejc
     
    I'm writing to you because i have near-proof that the stolen MtGox coins
    are being transfered to your exchange. I would appreciate any information
    you can supply about this matter but i understand that legal restrictions
    may apply. In either case this is crucial information to you and i hope you
    will take the required actions. The following will be a rundown of the
    proof (which can be expanded upon).
     
    In the time Jed McCaleb owned MtGox there was a donation address listed in
    the left side:
    1EuMa4dhfCK8ikgQ4emB7geSBgWK2cEdBG
    This address send coins in 2011 around the time the exchange changed owner
    to Mark Karpeles
    1EuMa <https://blockchain.info/address/1EuMa4dhfCK8ikgQ4emB7geSBgWK2cEdBG>
     -> 1FBiC<https://blockchain.info/address/1FBiCxd41EgQ4u6PQVsAadDoot7FD9sx99>
     -> 1B4AW<https://blockchain.info/address/1B4AW7BwBYGUbcZhXwv6JK6bmR6UFdR7BK>
     -> 1Kq6s<https://blockchain.info/address/1Kq6sr5A9bM82u1vRTByjCvvixm5dxwQuV>
     -> 1K66U<https://blockchain.info/address/1K66ULWc44926qYwdNUX5hf9pazf7DAQeU>
     -> 1pdMA<https://blockchain.info/address/1pdMAQEyFNSgN4RU4BF1bMWHjFgumXcnj>
    These coins were split into blocks of 2-5k which were used as cold storage.
    The 1pdMA<https://blockchain.info/address/1pdMAQEyFNSgN4RU4BF1bMWHjFgumXcnj>
    coins
    (plus the rest) didn't move until 2013-12-21 and 2014-02-05 as part of a
    huge movement of old coins following the same pattern. These coins are
    mapped in two spreadsheets
    here<https://docs.google.com/spreadsheet/ccc?key=0Aj-Hzmrt4w_6dEFxWDRLcWhKSG9PSDFQMXdCNVlKbGc&usp=sharing#gid=0>
     and here<https://docs.google.com/spreadsheet/ccc?key=0Aj-Hzmrt4w_6dGpnaGlTeV9qN0dCRFdNVHpGS2RGYkE&usp=sharing#gid=0>
    totaling
    ~300k coins.
    Two of the MtGox cold storage addresses moved as shown:
    1PNNF <https://blockchain.info/address/1PNNFz5u2qy9xstrHmBR2Z5dERmad1Ku3j>
     -> 1JFXQ<https://blockchain.info/da/address/1JFXQhnX6V38inxoBy5jDm9KgjeKx6nFp7>
     -> 1DJoA<https://blockchain.info/da/address/1DJoAkM4fqFjPYZTLXtUGfoya8zCXZsH8W>
     -> 1PAzo<https://blockchain.info/da/address/1PAzoSbf2mjK41H9FRY9u9QjabtEu4ATbb>
    14MiN<https://blockchain.info/da/address/14MiNG1HCnXaRNGgH43o8Ry9c4VcyYxL2L>
     -> 1HsUP<https://blockchain.info/da/address/1HsUPjn15EQP1mSeiB9BFifgwQzvwGQaYb>
     -> 1KnPn<https://blockchain.info/da/address/1KnPnAvUv11ukCg6d5q4i4jXkJQ6X2UASF>
     -> 1PAzo<https://blockchain.info/da/address/1PAzoSbf2mjK41H9FRY9u9QjabtEu4ATbb>
    I know that 1PAzo<https://blockchain.info/da/address/1PAzoSbf2mjK41H9FRY9u9QjabtEu4ATbb>
    is
    an address owned by Bitstamp and i assume that
    1DJoA<https://blockchain.info/da/address/1DJoAkM4fqFjPYZTLXtUGfoya8zCXZsH8W>
     and 1KnPn<https://blockchain.info/da/address/1KnPnAvUv11ukCg6d5q4i4jXkJQ6X2UASF>
    also
    are Bitstamp addresses used to receive coins from customers. This shows
    that the MtGox cold storage coins moved directly from cold storage to an
    unknown address and then to a Bitstamp address. There are an estimate of
    13500 coins moved to Bitstamp as of this moment.
     
    I'm looking forward to hearing from you and i will appreciate any
    information you may give me. It is of my interest to find the owner of
    1JFXQ<https://blockchain.info/da/address/1JFXQhnX6V38inxoBy5jDm9KgjeKx6nFp7>
     and 1HsUP<https://blockchain.info/da/address/1HsUPjn15EQP1mSeiB9BFifgwQzvwGQaYb>



http://pastebin.com/zApD5N4X    <<<< Not my pastebin

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[amspir]

Just playing devil's advocate, but how do you know that the 2011 movements weren't a withdrawal from mtGox that went into someone else's non-mtGox cold storage?

[TTM]

If I am the thief or whoever have those coins, i would cash them out through BTC-e.

[kooke]

If I am the thief or whoever have those coins, i would cash them out through BTC-e.

The thieves will probably be cashing out their coins on all of the exchanges. Why put all their stolen eggs in one basket?

[lnternet]

Appreciate the detective work. Assuming you are correct, what should bitstamp do about it?

[Aquent]

Appreciate the detective work. Assuming you are correct, what should bitstamp do about it?

That's for them and their lawyers to decide. We all would appreciate some public statement from them however in regards to whatever decision they take. They were emailed yesterday and have not yet responded.

[irrational]

Appreciate the detective work. Assuming you are correct, what should bitstamp do about it?

That's for them and their lawyers to decide. We all would appreciate some public statement from them however in regards to whatever decision they take. They were emailed yesterday and have not yet responded.

I don't think there is much that can be done. Those coins are lost. It's best to move on and learn that keeping large sums of BTC in online wallets, exchanges, etc is a bad idea.

[lorix]

There is another possibility here that could explain some of coin movements people have been observing as of late.

It stands to reason that even in MtGox's heyday holders of large amounts of BTC would be hesitant to leave their BTC under the complete control of MtGox, but still wanted access to the trading platform without having to move large amounts of coin back and forth. At the same time Gox - like any business that has preferred customers - would have wanted to accommodate these "whales" to keep their business.

Is it outside the realm of possibility that Gox held the funds of "whales" on their system in wallets whose private keys were shared with the account holder, unlike the regular pleb users who they didn't?

They could have broken it up into multiple wallets for all we know, but the point is that the "whales" retained direct access to their funds and could have moved them out at any time regardless of what was going on at MtGox at the time.

tl;dr version: Did Gox allow preferred clients to keep shared private keys to BTC on the exchange, which allowed them to independently move their funds out?

[btbrae]

I think the problem for Bitstamp and other exchanges becomes more complicated once they are knowingly in receipt of money obtained through illegal means or have been notified as such. They probably need to tread very carefully here.

[BITCOIN-PIZZA-DAY]

Just playing devil's advocate, but how do you know that the 2011 movements weren't a withdrawal from mtGox that went into someone else's non-mtGox cold storage?

There are about 150k coins that caused the feb 6th spike in bitcoin days destroyed. It's a single owner and close to mtgox. It's either McCaleb or gox. I'm thinking it's McCaleb and it could be that he was trying to save the coins from bankruptcy. This has to be investigated.

[ab8989]

Bitstamp has been for a long time bugging people with all kinds of AML stuff in situations where money laundering does not really seem relevant at all.
see for example: https://bitcointalk.org/index.php?topic=406908.0

Now we have a situation where we have a very high probability money laundering ongoing and so now it is time to see whether bitstamp was really serious with the AML stuff or whether the all AML in bitstamp was just bullshit invented in order to bug the little people.

[lorix]

Just playing devil's advocate, but how do you know that the 2011 movements weren't a withdrawal from mtGox that went into someone else's non-mtGox cold storage?

There are about 150k coins that caused the feb 6th spike in bitcoin days destroyed. It's a single owner and close to mtgox. It's either McCaleb or gox. I'm thinking it's McCaleb and it could be that he was trying to save the coins from bankruptcy. This has to be investigated.

And if found true it could point at insider trading.

[Beliathon]

I don't think there is much that can be done. Those coins are lost. It's best to move on and learn that keeping large sums of BTC in online wallets, exchanges, etc is a bad idea.

This. Cryptocurrency is not for fools. Personally I'm glad most of the fools and weak hands have been shaken out by scammers and thieves - it was bound to happen anyway. Better it happen in one big, early crime than happen over many smaller crimes over a long, painful period of time. That scenario would be far more damaging to Bitcoin in the long run.

[5thStreetResearch]

even if they are, it is not bitstamp's fault/responsibility.  That goes in the face of the whole decentralization of bitcoin.  Mt Gox was negligent, that is a centralized problem/loss, that shouldnt spill over into affecting other businesses in the same space.

[amspir]

Bitstamp has been for a long time bugging people with all kinds of AML stuff in situations where money laundering does not really seem relevant at all.
see for example: https://bitcointalk.org/index.php?topic=406908.0

Now we have a situation where we have a very high probability money laundering ongoing and so now it is time to see whether bitstamp was really serious with the AML stuff or whether the all AML in bitstamp was just bullshit invented in order to bug the little people.

This will be a test of government involvment in bitcoin.  Since noone in governmental authority has currently declared these coins stolen, then the liability should be on the entity/person that put them into bitstamp, where bitstamp should give up the identity of the that entity/person when presented with the proper legal paperwork.  

If bitstamp is held liable for accepting coins that are later legally proven to be stolen, this will present a serious issue with the fungibility of bitcoin.

At any rate, if I were bitstamp, I'd probably freeze the funds and give the Japanese bankruptcy court an opportunity to lay claim to them out of due diligence, due to the large amount.

[pungopete468]

I think the problem for Bitstamp and other exchanges becomes more complicated once they are knowingly in receipt of money obtained through illegal means or have been notified as such. They probably need to tread very carefully here.

This.

Gox is already under the legal lense and this forum is actively monitored for leads. This is definitely a trail that will be followed.

After being notified, Bitstamp has a legal obligation to inquire into the origin of these coins. If the court determines that these coins are stolen then Bitstamp will be charged with money laundering and their USD bank accounts may be seized just like those Gox accounts were.

It doesn't matter if we agree with the AML rules, Bitstamp is a financial service provider and the rules are clear. Bitstamp has only one legal option in this situation...

If bitstamp is held liable for accepting coins that are later legally proven to be stolen, this will present a serious issue with the fungibility of bitcoin.

They won't be charged with accepting stolen coins, they only become liable from the moment they were notified that the coins are "allegedly" stolen. If they ignore the allegations and allow the coins to trade without investigating the source then they are willfully laundering money.

[BTCisthefuture]

Assuming this is correct,  what can or should be done?

It brings up the question people have asked for years now....what do you do if you know coins in your possession came from a crime or thievery of some sort ??

I believe the general consensus amongst a lot of people is not much can be or should be done.  Similar to if you took cash out of an ATM and found out that a year ago those $20 bills were stolen from someones house. Should you give the money to owner (if you can find them) and you end up losing money,  should a bank get involved?  etc etc.

[irrational]

I think the problem for Bitstamp and other exchanges becomes more complicated once they are knowingly in receipt of money obtained through illegal means or have been notified as such. They probably need to tread very carefully here.

This.

Gox is already under the legal lense and this forum is actively monitored for leads. This is definitely a trail that will be followed.

After being notified, Bitstamp has a legal obligation to inquire into the origin of these coins. If the court determines that these coins are stolen then Bitstamp will be charged with money laundering and their USD bank accounts may be seized just like those Gox accounts were.

If you were talking USD and a US based company, I know this would be true. But neither are true. Specifically this company isn't dealing with stolen fiat, and I know of no laws compelling companies of any country to investigate stolen "virtual" currencies.

I could be wrong, and that's why I wanted to ask... what laws would compel them to do anything?

[alfabitcoin]

Question is are bitstamp legaly obligated to investigate solely on some online notification? I do not think so and that would be a huge mess and possible abuse by bogus claims.

[amspir]

If bitstamp is held liable for accepting coins that are later legally proven to be stolen, this will present a serious issue with the fungibility of bitcoin.

They won't be charged with accepting stolen coins, they only become liable from the moment they were notified that the coins are "allegedly" stolen. If they ignore the allegations and allow the coins to trade without investigating the source then they are willfully laundering money.

Where would the legal liability begin?  Bitstamp can't be held accountable for not reading every bitcoin forum or respond to a random emails.   However, legal counsel representing the creditors should immediately notify Bitstamp that the funds are suspected stolen.