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There is no fucking way 700,000 BTC disappears with nobody noticing. This must have been building for a long time. Was there never any attempt to compare BTC i

by panarky 13y ago

There is no fucking way 700,000 BTC disappears with nobody noticing. This must have been building for a long time. Was there never any attempt to compare BTC in wallets to customer balances? Or did MtGox know about this problem, and hope to cover it up over time? Either case is at least gross negligence if not criminal fraud. Yes, we all fuck up at some point. But I don't pretend to be a surgeon and perforate a patient's aorta. Pretending to be competent to gain people's trust is fraud. I sympathize with those who lost money in this clusterfuck. No sympathy for Karpeles.

sheetjs 13y ago
> There is no fucking way 700,000 BTC disappears with nobody noticing. The history of Barings Bank is interesting, primarily because the main trader Nick Leeson was in the position to mask hundreds of millions of pounds of losses. In that case, no one noticed the roughly $1.3B loss because he was in a position where the internal controls didn't apply
- panarky 13y ago
  At Barings, Leeson was trading futures contracts and he was also responsible for accounting for his own positions. There was no segregation of duties, no mark-to-market. At MtGox, it should be much simpler to (1) add up all customer balances, (2) add up all BTC in hot and cold wallets, and (3) compare those two numbers. If the numbers differ by more than timing differences, shut it down, debug it, and prevent a small problem from becoming a big problem. The Barings backstory is that the billion-dollar loss started with a 20k bad trade, Leeson tried to cover it up, and it snowballed. It wouldn't be surprising to learn that MtGox followed a similar trajectory.
  - FireBeyond 13y ago
    Which is just another aspect of the travesty - that someone responsible for routinely trading tens of millions of dollars per transaction should feel the need to cover up a $20,000 loss.
    - gatehouse 13y ago
      Leeson tried to cover it up because he wasn't supposed to be trading at all, he was supposed to a broker and he decided to try to make some extra money.
  - deleted 13y ago
    [deleted]
  - dobbsbob 13y ago
    >At MtGox, it should be much simpler to (1) add up all customer balances, (2) add up all BTC in hot and cold wallets, and (3) compare those two numbers. Yes, considering Gox only had 2 bank accounts (and now are down to just 1 in Japan) I don't see how hard it is to compare balances and notice 744,000 coins are missing. They claim that over time the cold wallet was cleaned out. If this is true then the first few customers would've complained hey I never got my coins, and he could've seen shenanigans happening due to his php wallet implementation and halted all trading. Then thousands more customers. I find it hard to believe 744,000 worth of coins disappeared over months and nobody noticed until recently
  - rhizome 13y ago
    You also have to account for the insane levels of indirection in the management structure of an institution like Barings Bank, an exponential sneakernet.
- anigbrowl 13y ago
  Heh, I had only been on the internet for about 2 years when that went down and I spent that evening watching the world's gears seize up instead of finishing the book I was suppose to be writing; it was around this time that I started tog et interested in alternative currencies. I was just thinking that here I am doing the same thing 20 years later.
- jpatokal 13y ago
  The Wikipedia article is worth a read: https://en.wikipedia.org/wiki/Nick_Leeson#Downfall https://en.wikipedia.org/wiki/Nick_Leeson#Downfall
ryanobjc 13y ago
You must be new here... I have seen PLENTY of situations where internal controls are weak, NO people dont cross compare assets and liabilities.
deleted 13y ago
[deleted]
dobbsbob 13y ago
Most people who've been around bitcointalk and bitcoin-otc know not to use MtGox since circa 2011 when their stunning incompetence was at it's height. Sadly there were plenty of media shill articles when Btc skyrocketed to $1,000 last year who were promoting them as the "Biggest Bitcoin exchange" without pointing people to relevant bitcointalk threads on what a nightmare that site has been over the years. If you read MagicalTux's personal blog you'd know to never trust anything he's coded too. http://blog.magicaltux.net/2010/06/27/php-can-do-anything-what-about-some-ssh/ http://blog.magicaltux.net/2010/06/27/php-can-do-anything-wh...
- imperialdrive 13y ago
  I've been around. What is bitcoin?, and who cares about whatever the hell 'Mount Gox' is?? Can we all get back to work on something meaningful to the future, family, or nature... someone we don't know about made up a currency, and some other company we also don't know about made up an 'exchange' of this 'currency' and now we still don't know what's going on and some 'bitcoins' are missing... the most it's all worth is a laugh
  - Rumudiez 13y ago
    A laugh and a few good tens of millions of dollars that people actually do value and will pay that much for. Maybe cryptocurrencies aren't in your favor, but their value and growth isn't something to scoff at.
  - Crito 13y ago
    I mean, you are the one that decided to dive into the middle of a bitcoin discussion. I typically find it rather easy to ignore things that do not interest me, maybe you should work on that.
  - VMG 13y ago
    > I've been around. What is bitcoin? From https://bitcoin.org/bitcoin.pdf‎ https://bitcoin.org/bitcoin.pdf‎: Abstract. A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending. Of course, the coins are only yours if you hold the private keys. A promise of some Japanese exchange to send you an amount of Bitcoin in the future is not the same as owning a Bitcoin. It's pretty interesting, you should read it.
Istof 13y ago
if there is no fucking way, then where is the news
ck2 13y ago
Especially if you are paying millions to accounts each year according to that document. Where did those accountants get their degrees/licenses?
bertil 13y ago
> Either case is at least gross negligence if not criminal fraud. To echo the original commenter: Yes, jail sounds like a reasonable end to this — but keep it restrained. > No sympathy for Karpeles. No, certainly not for hiding his incompetence, but I think the point was more: don't be too graphic in wishing him to discover what sex in jail can be. That’s an… understandable reaction, but inappropriate on a public forum. He’s got family who cares about his well-being, and the next days are going to be tough for them too. Imagine talking to his mother, or children: the facts, they are going to need them to understand, but nothing violent or tasteless (and I think you did a great job). > But I don't pretend to be a surgeon and perforate a patient's aorta. He didn't kill anyone; I'm sure one can save a lot of lives with that kind of money, but… I’d rather see you compare him to Kerviel (I'd disagree) or that Barings' trader (closer). The Head of security at Target, or Sony might be more accurate cases.

by panarky 13y ago

sheetjs 13y ago

> There is no fucking way 700,000 BTC disappears with nobody noticing. The history of Barings Bank is interesting, primarily because the main trader Nick Leeson was in the position to mask hundreds of millions of pounds of losses. In that case, no one noticed the roughly $1.3B loss because he was in a position where the internal controls didn't apply

panarky 13y ago
At Barings, Leeson was trading futures contracts and he was also responsible for accounting for his own positions. There was no segregation of duties, no mark-to-market. At MtGox, it should be much simpler to (1) add up all customer balances, (2) add up all BTC in hot and cold wallets, and (3) compare those two numbers. If the numbers differ by more than timing differences, shut it down, debug it, and prevent a small problem from becoming a big problem. The Barings backstory is that the billion-dollar loss started with a 20k bad trade, Leeson tried to cover it up, and it snowballed. It wouldn't be surprising to learn that MtGox followed a similar trajectory.
- FireBeyond 13y ago
  Which is just another aspect of the travesty - that someone responsible for routinely trading tens of millions of dollars per transaction should feel the need to cover up a $20,000 loss.
  - gatehouse 13y ago
    Leeson tried to cover it up because he wasn't supposed to be trading at all, he was supposed to a broker and he decided to try to make some extra money.
- deleted 13y ago
  [deleted]
- dobbsbob 13y ago
  >At MtGox, it should be much simpler to (1) add up all customer balances, (2) add up all BTC in hot and cold wallets, and (3) compare those two numbers. Yes, considering Gox only had 2 bank accounts (and now are down to just 1 in Japan) I don't see how hard it is to compare balances and notice 744,000 coins are missing. They claim that over time the cold wallet was cleaned out. If this is true then the first few customers would've complained hey I never got my coins, and he could've seen shenanigans happening due to his php wallet implementation and halted all trading. Then thousands more customers. I find it hard to believe 744,000 worth of coins disappeared over months and nobody noticed until recently
- rhizome 13y ago
  You also have to account for the insane levels of indirection in the management structure of an institution like Barings Bank, an exponential sneakernet.
anigbrowl 13y ago
Heh, I had only been on the internet for about 2 years when that went down and I spent that evening watching the world's gears seize up instead of finishing the book I was suppose to be writing; it was around this time that I started tog et interested in alternative currencies. I was just thinking that here I am doing the same thing 20 years later.
jpatokal 13y ago
The Wikipedia article is worth a read: https://en.wikipedia.org/wiki/Nick_Leeson#Downfall https://en.wikipedia.org/wiki/Nick_Leeson#Downfall

ryanobjc 13y ago

You must be new here... I have seen PLENTY of situations where internal controls are weak, NO people dont cross compare assets and liabilities.

deleted 13y ago

[deleted]

dobbsbob 13y ago

Most people who've been around bitcointalk and bitcoin-otc know not to use MtGox since circa 2011 when their stunning incompetence was at it's height. Sadly there were plenty of media shill articles when Btc skyrocketed to $1,000 last year who were promoting them as the "Biggest Bitcoin exchange" without pointing people to relevant bitcointalk threads on what a nightmare that site has been over the years. If you read MagicalTux's personal blog you'd know to never trust anything he's coded too. http://blog.magicaltux.net/2010/06/27/php-can-do-anything-what-about-some-ssh/ http://blog.magicaltux.net/2010/06/27/php-can-do-anything-wh...

imperialdrive 13y ago
I've been around. What is bitcoin?, and who cares about whatever the hell 'Mount Gox' is?? Can we all get back to work on something meaningful to the future, family, or nature... someone we don't know about made up a currency, and some other company we also don't know about made up an 'exchange' of this 'currency' and now we still don't know what's going on and some 'bitcoins' are missing... the most it's all worth is a laugh
- Rumudiez 13y ago
  A laugh and a few good tens of millions of dollars that people actually do value and will pay that much for. Maybe cryptocurrencies aren't in your favor, but their value and growth isn't something to scoff at.
- Crito 13y ago
  I mean, you are the one that decided to dive into the middle of a bitcoin discussion. I typically find it rather easy to ignore things that do not interest me, maybe you should work on that.
- VMG 13y ago
  > I've been around. What is bitcoin? From https://bitcoin.org/bitcoin.pdf‎ https://bitcoin.org/bitcoin.pdf‎: Abstract. A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending. Of course, the coins are only yours if you hold the private keys. A promise of some Japanese exchange to send you an amount of Bitcoin in the future is not the same as owning a Bitcoin. It's pretty interesting, you should read it.

Istof 13y ago

if there is no fucking way, then where is the news

ck2 13y ago

Especially if you are paying millions to accounts each year according to that document. Where did those accountants get their degrees/licenses?

bertil 13y ago

> Either case is at least gross negligence if not criminal fraud. To echo the original commenter: Yes, jail sounds like a reasonable end to this — but keep it restrained. > No sympathy for Karpeles. No, certainly not for hiding his incompetence, but I think the point was more: don't be too graphic in wishing him to discover what sex in jail can be. That’s an… understandable reaction, but inappropriate on a public forum. He’s got family who cares about his well-being, and the next days are going to be tough for them too. Imagine talking to his mother, or children: the facts, they are going to need them to understand, but nothing violent or tasteless (and I think you did a great job). > But I don't pretend to be a surgeon and perforate a patient's aorta. He didn't kill anyone; I'm sure one can save a lot of lives with that kind of money, but… I’d rather see you compare him to Kerviel (I'd disagree) or that Barings' trader (closer). The Head of security at Target, or Sony might be more accurate cases.