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Author Topic: [2014-06-27] WSJ: Mt. Gox Head Believes No More Bitcoin Will Be Found  (Read 2286 times)
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June 27, 2014, 07:29:09 AM
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http://online.wsj.com/articles/mt-gox-head-believes-no-more-bitcoin-will-be-found-1403850830

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JAPAN NEWS

Mt. Gox Head Believes No More Bitcoin Will Be Found

By TAKASHI MOCHIZUKI And ELEANOR WARNOCK CONNECT
June 27, 2014 2:33 a.m. ET

Mt. Gox CEO Mark Karpelès speaks at a news conference at the Justice Ministry in Tokyo on Feb. 28. Associated Press
TOKYO—Scared, frustrated and angry—that's how Mark Karpelès, head of defunct bitcoin exchange Mt. Gox, says he felt when he realized in February that the exchange had lost nearly half a billion dollars' worth of the internet currency.

He said he has spent many sleepless nights since then. "I was always worried: 'What if all the bitcoins got stolen?" the 29-year-old Frenchman told The Wall Street Journal.

The Tokyo-based exchange blamed hacking attacks for the loss of 850,000 bitcoins, mostly those of customers. Since then Mr. Karpelès has rediscovered 200,000 bitcoins, but he doesn't believe more will be found.

"As the company head, my mission was to protect customers and employees," Mr. Karpelès said in the interview, his first with media since a Feb. 28 news conference to announce the exchange's bankruptcy filing. "I'm deeply sorry. I'm frustrated with myself."

From his 33rd-floor apartment in Tokyo's upscale Meguro neighborhood, he said he plans to auction off domain names as one way of keeping his other business alive and repaying creditors. Among them: bitcoins.com and akb.com, short for AKB48, a popular Japanese pop group. He didn't say whether the domain of mtgox.com would be for sale.

The high-profile collapse of Mt. Gox—once the world's largest bitcoin exchange--raised questions about exchanges' safekeeping of customers' bitcoin. A court-appointed trustee in Japan said in April that Mt. Gox was to be liquidated. On June 18, a Texas bankruptcy court approved Mt. Gox's application for bankruptcy protection of its U.S. assets.

Mr. Karpelès is still the CEO of Mt. Gox, though he has transferred all the funds to a court-appointed trustee. He has been busy trying to keep alive his web-services company, Tibanne, which was the de facto operator of Mt. Gox. He said the trustee would monitor the sale of domain names, and any extra proceeds after Tibanne has been funded through the end of the year would go to Mt. Gox creditors.

He says he wants to find a new head for Tibanne--named for his orange-and-white cat, which stayed close during the interview. He will then stay on as an engineer to help develop the company's services.

That decision comes from his experiences at Mt. Gox, where he says the failure to find experienced executives to help him deal with day-to-day operations was a critical mistake. Instead of focusing on the company's technology, he often spent hours each day in meetings with lawyers and bankers.

"The weakest point of my company was management," said Mr. Karpelès, who was the sole executive of the company. "I failed to lay out appropriate corporate structures."

Mr. Karpelès says he would prefer for someone to take over the exchange and that there are several groups interested.

Mr. Karpelès suggested he is concerned that one such plan, backed by child-actor-turned-entrepreneur Brock Pierce has proposed using Mt. Gox customer money to rehabilitate the exchange.

"To begin with, remaining customer money should not be touched," he said.

A police investigation is still under way in Japan concerning the missing bitcoins. Mr. Karpelès said un addition to hacking attacks taking advantage of a system weakness called transaction malleability, there were physical break-ins at the company's offices and that at least one former employee pilfered electronic data. A Metropolitan Police Department spokesman said on Friday that he couldn't say anything about the investigation.

"If anyone wants to start a bitcoin exchange, I would say, 'Be sure to have 24-hour security guards,'" Mr. Karpelès said.

Mr. Karpelès indicated that the exchange's fast growth had been too much for him to handle without experienced help. Just in the three months after he bought Mt. Gox from founder Jed McCaleb in March 2011, the number of accounts surged 20 times from 3,000, he said. Mr. Karpelès tried to hire experienced managers but profits in the early days weren't enough, he said.

Mr. Karpelès says that since Mt. Gox fell apart he has returned to the habits of his early days in Tokyo, including eating less-than-$2 instant noodles. He wakes continues to work after he comes home at night, trying to find customers for a new Tibanne service.

Though he is staying far away from bitcoin, Mr. Karpelès said he wants to participate in meetings of Tokyo's bitcoin community some day and would be willing to share his story with fledgling bitcoin businesses.

"My experience would be valuable to them, especially if they are thinking of starting up a bitcoin business," Mr. Karpelès said. "I can tell them what they should do and shouldn't."

Write to Takashi Mochizuki at takashi.mochizuki@wsj.com and Eleanor Warnock at eleanor.warnock@wsj.com

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June 27, 2014, 07:36:59 AM
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Still want my coins back...grrrrr

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