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My take on this is that they probably were insolvent for a long time already due to previous hacks/theft. The CEO just decided to lie about the supposedly 137M

by LeonM 8y ago

My take on this is that they probably were insolvent for a long time already due to previous hacks/theft. The CEO just decided to lie about the supposedly 137M in funds 'safely' stored on his laptop. This is also what happened at MtGox, except that at MtGox they 'lost' wel over a million BTC. Edit: relevant listening: https://darknetdiaries.com/episode/9/ https://darknetdiaries.com/episode/9/

chx 8y ago
> at MtGox they 'lost' wel over a million BTC. The initial report was 850 000 lost BTC which later was brought down to 650 000. Scroll to the end of https://www.mtgox.com/img/pdf/20140320-btc-announce.pdf https://www.mtgox.com/img/pdf/20140320-btc-announce.pdf
- LeonM 8y ago
  Before/after the 850k/650k hack there were numerous other hacks, the total number of stolen BTC is still not clear, new proof of other hacks is still being discovered. Apparently Karpeles also found a 'forgotten' wallet of 200k BTC, which he still seems to own. It's a mess.
  - tinco 8y ago
    No, the found wallet is under the control of the trustee overseeing the bankruptcy of MtGox. We know this for certain because he sold 35,000BTC when BTC was around 10,000USD, ensuring the creditors will get their full investment back. Doesn't make us whole of course, but it is nice.
    - 1stcity3rdcoast 8y ago
      I lost some 2010 BTC (trading at ~$30) in the MtGox failure, and then missed the window to make a claim. Harsh.
      - eggsome 8y ago
        But it was trading at around $600 during the MtGox meltdown. Are you thinking of the first MtGox crash (June 2011) that they recovered from?
        tinco 8y ago
        I think he means he bought them when they where $30, so he would have made some nice gains.
        1stcity3rdcoast 8y ago
        Tinco is correct, I bought before the MtGox crash at around $30 but used them as my exchange to do the trade, and never pulled them into a wallet.
      - tinco 8y ago
        Did you miss the second claim window as well? We got the trustee to change the bankruptcy format, and it reopened the claim window until I think November. Did you not get any emails about the claims?
        1stcity3rdcoast 8y ago
        Everything I used to buy the BTC was anonymized (cash deposit, throwaway email address). I have all my MtGox login information but can't access the email address I used to verify anything. Any way I can still file a claim?
        tinco 8y ago
        I think you're too late, but you can make an account here and ask: forum.mtgoxlegal.com It's a forum organized by creditors who together pay for a lawyer and an activist to represent us in the bankruptcy.
    - gowld 8y ago
      What a beautiful swindle. People who got creamed in the MtGox pyramid collapse where made almost whole by a next generation of suckers who lost 65% of their BTC's value in the bubble.
tim333 8y ago
Kraken had like a two hour podcast coming to much the same conclusion as the most probable explanation https://www.youtube.com/watch?v=QB0OQae4fWo https://www.youtube.com/watch?v=QB0OQae4fWo It seems the problems may have started with a software screw up, leaving the "0x" off the ether address. https://www.reddit.com/r/ethereum/comments/6ettq5/statement_on_quadrigacx_ether_contract_error/ https://www.reddit.com/r/ethereum/comments/6ettq5/statement_... which lost them I think 67,317 ETH permanently. Ah the wonders of cryptocurrency. https://www.reddit.com/r/ethereum/comments/6er78h/warning_do_not_use_safeconditionalhftransfer_or/ https://www.reddit.com/r/ethereum/comments/6er78h/warning_do...
- Scoundreller 8y ago
  I’m a bit sympathetic to their loss. They were supposed to use 0x notation for a particular hex value, but the software always worked without it. Then some tiny x.x.1 patch upgrade changed the functionality, now requiring the 0x, without documenting the change.
  - tim333 8y ago
    It's scary that with crypto such things can make it so hard to get your money back. I know there was talk of fixing it with a fork to the Ethereum chain one day. Not sure what happened there.
    - Scoundreller 8y ago
      They did that once. I guess this exchange didn’t have enough pull to change the whole “code is law” principle.
HenryBemis 8y ago
And this is the problem. These guys are not regulated. There is no transparency. There are no external auditors. There is no control. When we find out, it is always too late. Every "cryptocurrency bank" is a potential Enron. I fear both the involvement of Central Banks and at the same time the lack of it. If EY (or anyone else serious about this) 'follows the money' then that would be a very interesting report to read.
- this_user 8y ago
  > These guys are not regulated. There is no transparency. There are no external auditors. There is no control. But that's a feature, not a bug, at least according to the crypto people. But, so far, all they have managed to do is rediscover lessons about the need for regulation, oversight and accountability that the financial industry has learnt decades or even centuries ago.
  - icebraining 8y ago
    Considering 2008, what's the point of those lessons? Might as well save a few tax dollars on "regulators".
    - blibble 8y ago
      how many depositors lost money in the financial crisis?
      - easymodex 8y ago
        Probably an order of magnitude more than whole crypto-sphere combined. People just think if they didn't lose anything it wasn't that bad.
      - poooogles 8y ago
        In the UK and Netherlands plenty due to icesave AFAIK [1]. I'm not sure if deposits over the protected amount were ever paid back. //edit - looks like they were by the UK and NL governments. 1. https://en.m.wikipedia.org/wiki/Icesave_dispute https://en.m.wikipedia.org/wiki/Icesave_dispute
tyingq 8y ago
Insolvent sounds right, but wouldn't you have, say $10M or so, reserved for the getaway? Once it's that low, the jig is up, so you may as well abscond with the last bit.
valtism 8y ago
Darknet Diaries is such a good podcast. I've been working through it recently and this is the next episode I'm up to. Can't wait.
joe_the_user 8y ago
Yes, insolvent meaning owned more than their cash on hand. That didn't mean there wasn't some funds left over. But when someone is the position where they've taken someone's money and only have some left, leaving with the rest inherently looks better than staying and being broke and guilty. Adds an extra nuance to "wake up, time to die"

by LeonM 8y ago

chx 8y ago

> at MtGox they 'lost' wel over a million BTC. The initial report was 850 000 lost BTC which later was brought down to 650 000. Scroll to the end of https://www.mtgox.com/img/pdf/20140320-btc-announce.pdf https://www.mtgox.com/img/pdf/20140320-btc-announce.pdf

LeonM 8y ago
Before/after the 850k/650k hack there were numerous other hacks, the total number of stolen BTC is still not clear, new proof of other hacks is still being discovered. Apparently Karpeles also found a 'forgotten' wallet of 200k BTC, which he still seems to own. It's a mess.
- tinco 8y ago
  No, the found wallet is under the control of the trustee overseeing the bankruptcy of MtGox. We know this for certain because he sold 35,000BTC when BTC was around 10,000USD, ensuring the creditors will get their full investment back. Doesn't make us whole of course, but it is nice.
  - 1stcity3rdcoast 8y ago
    I lost some 2010 BTC (trading at ~$30) in the MtGox failure, and then missed the window to make a claim. Harsh.
    - eggsome 8y ago
      But it was trading at around $600 during the MtGox meltdown. Are you thinking of the first MtGox crash (June 2011) that they recovered from?
      - tinco 8y ago
        I think he means he bought them when they where $30, so he would have made some nice gains.
      - 1stcity3rdcoast 8y ago
        Tinco is correct, I bought before the MtGox crash at around $30 but used them as my exchange to do the trade, and never pulled them into a wallet.
    - tinco 8y ago
      Did you miss the second claim window as well? We got the trustee to change the bankruptcy format, and it reopened the claim window until I think November. Did you not get any emails about the claims?
      - 1stcity3rdcoast 8y ago
        Everything I used to buy the BTC was anonymized (cash deposit, throwaway email address). I have all my MtGox login information but can't access the email address I used to verify anything. Any way I can still file a claim?
        tinco 8y ago
        I think you're too late, but you can make an account here and ask: forum.mtgoxlegal.com It's a forum organized by creditors who together pay for a lawyer and an activist to represent us in the bankruptcy.
  - gowld 8y ago
    What a beautiful swindle. People who got creamed in the MtGox pyramid collapse where made almost whole by a next generation of suckers who lost 65% of their BTC's value in the bubble.

tim333 8y ago

Kraken had like a two hour podcast coming to much the same conclusion as the most probable explanation https://www.youtube.com/watch?v=QB0OQae4fWo https://www.youtube.com/watch?v=QB0OQae4fWo It seems the problems may have started with a software screw up, leaving the "0x" off the ether address. https://www.reddit.com/r/ethereum/comments/6ettq5/statement_on_quadrigacx_ether_contract_error/ https://www.reddit.com/r/ethereum/comments/6ettq5/statement_... which lost them I think 67,317 ETH permanently. Ah the wonders of cryptocurrency. https://www.reddit.com/r/ethereum/comments/6er78h/warning_do_not_use_safeconditionalhftransfer_or/ https://www.reddit.com/r/ethereum/comments/6er78h/warning_do...

Scoundreller 8y ago
I’m a bit sympathetic to their loss. They were supposed to use 0x notation for a particular hex value, but the software always worked without it. Then some tiny x.x.1 patch upgrade changed the functionality, now requiring the 0x, without documenting the change.
- tim333 8y ago
  It's scary that with crypto such things can make it so hard to get your money back. I know there was talk of fixing it with a fork to the Ethereum chain one day. Not sure what happened there.
  - Scoundreller 8y ago
    They did that once. I guess this exchange didn’t have enough pull to change the whole “code is law” principle.

HenryBemis 8y ago

And this is the problem. These guys are not regulated. There is no transparency. There are no external auditors. There is no control. When we find out, it is always too late. Every "cryptocurrency bank" is a potential Enron. I fear both the involvement of Central Banks and at the same time the lack of it. If EY (or anyone else serious about this) 'follows the money' then that would be a very interesting report to read.

this_user 8y ago
> These guys are not regulated. There is no transparency. There are no external auditors. There is no control. But that's a feature, not a bug, at least according to the crypto people. But, so far, all they have managed to do is rediscover lessons about the need for regulation, oversight and accountability that the financial industry has learnt decades or even centuries ago.
- icebraining 8y ago
  Considering 2008, what's the point of those lessons? Might as well save a few tax dollars on "regulators".
  - blibble 8y ago
    how many depositors lost money in the financial crisis?
    - easymodex 8y ago
      Probably an order of magnitude more than whole crypto-sphere combined. People just think if they didn't lose anything it wasn't that bad.
    - poooogles 8y ago
      In the UK and Netherlands plenty due to icesave AFAIK [1]. I'm not sure if deposits over the protected amount were ever paid back. //edit - looks like they were by the UK and NL governments. 1. https://en.m.wikipedia.org/wiki/Icesave_dispute https://en.m.wikipedia.org/wiki/Icesave_dispute

tyingq 8y ago

Insolvent sounds right, but wouldn't you have, say $10M or so, reserved for the getaway? Once it's that low, the jig is up, so you may as well abscond with the last bit.

valtism 8y ago

Darknet Diaries is such a good podcast. I've been working through it recently and this is the next episode I'm up to. Can't wait.

joe_the_user 8y ago

Yes, insolvent meaning owned more than their cash on hand. That didn't mean there wasn't some funds left over. But when someone is the position where they've taken someone's money and only have some left, leaving with the rest inherently looks better than staying and being broke and guilty. Adds an extra nuance to "wake up, time to die"