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> 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 Leeso

by 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

by sheetjs 13y ago

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