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Apparent Theft at Mt. Gox Shakes Bitcoin World
- rahimnathwani 13y agoExisting discussions about this news: https://news.ycombinator.com/item?id=7295190 https://news.ycombinator.com/item?id=7295190 https://news.ycombinator.com/item?id=7295084 https://news.ycombinator.com/item?id=7295084 https://news.ycombinator.com/item?id=7294762 https://news.ycombinator.com/item?id=7294762 https://news.ycombinator.com/item?id=7295331 https://news.ycombinator.com/item?id=7295331
- anigbrowl 13y agoWe know that. It's notable that the NYT has picked up on it, and is presenting it this way, though.
- sillysaurus3 13y agoWow. Check out the people who lost serious money on MtGox: http://www.reddit.com/r/Bitcoin/comments/1yv26o/gox_horror_story_thread_how_much_did_you_lose/ http://www.reddit.com/r/Bitcoin/comments/1yv26o/gox_horror_s... One person lost 1998 btc. That was anywhere from $500,000 to a million bucks.
- toomuchtodo 13y agoFrom that same thread: "I'm still hopeful that something good will happen. If not, I would not be unhappy if someone ordered a hit." Wow.
- jrlocke 13y agoNot a good time to be Mark Karpeles.
- deleted 13y ago[deleted]
- anigbrowl 13y agoWatching the bitcoin ticker (http://bitcointicker.co/# http://bitcointicker.co/#) you can see the tug-of-war bgoing on between people who are trying to pull the price lower and those who are trying to maintain it. Over the last few hours it's been a complete trainwreck, millions of dollars disappearing every few minutes and so on. OK, you could watch the currency markets do this for real money all day but most of the time they trade on fundamentals. Watching a currency crisis unfold is a lot more interesting. Unrelated: I see redditors are handing out 1:1 sympathy tips in DogeCoin.
- meddlepal 13y agoOn one hand I feel really bad for a lot of these people, but there were so many flashing lights and warning signs around MtGox that these people had to see putting money into this company was a bad idea right? The exchange was a cobbled-together technical-mess that was originally supposed to be used for trading cards. They made a quick pivot and tried to wing it as a financial institution. Hopefully the BTC and finance community learn from this disaster. There is going to be a huge market for a highly-regulated exchange run by banks and investment houses in the near future.
- pmorici 13y agoYeah, the only possible excuse is if you were new to Bitcoin and went with Gox because it is what was mentioned in the media most often. When I first got into it a year ago I used Gox for a couple weeks before I realized it was totally FUBAR and got out.
- dredmorbius 13y agoAnother 4700. About $2.3 million.
- jakejake 13y agoYikes I guess I shouldn't feel so bad about my 0.03 btc that I lost.
- nerfhammer 13y agoHere they are a few hours earlier trying to convince themselves that it was all FUD: http://www.reddit.com/r/Bitcoin/comments/1yscsq/mtgox_lets_take_an_impartial_look_at_this_for_a/ http://www.reddit.com/r/Bitcoin/comments/1yscsq/mtgox_lets_t...
- deleted 13y ago[deleted]
- chm 13y agoThis is a really sad moment but let's hope it teaches everybody lessons. One very nice thing about cryptocurrencies is that they can be kept safe in cold storage without too much trouble. Some people kept all their coins there. It's a shame, but too bad. Otherwise, I really hope Gox dies, in a darwinian business sense. Forest fires destroy big trees but makes way for new shoots.
- sneak 13y agoYeah, lessons are what people need. http://www.reddit.com/r/Bitcoin/comments/1yv26o/gox_horror_story_thread_how_much_did_you_lose/cfo57gh http://www.reddit.com/r/Bitcoin/comments/1yv26o/gox_horror_s... "But too bad."
- chm 13y agoI stupidly had my life's savings in bitcoin, and when the price started to fall, I converted to dollars and watched the price plummet. I lost $357,000. As I said, this is a sad moment for him. My point still stands: it was a very naïve and borderline criminally stupid thing to do. I feel bad for the guy because he didn't make Mt. Gox crash, but then he could win the equivalent of a Darwin Award in finance. Harsh words, but you can't reason yourself out of such a bad decision as that he made. He should have used cold storage, period.
- bostonpete 13y agoI thought big trees generally fared the best in forest fires...
- talmand 13y agoFor some trees the fire causes the big trees to open their cones so that new trees may grow after the fire has run its course. Sometimes nature has interesting emergency backup systems.
- wikwocket 13y agoHopefully one of the lessons people learn is, "If it looks too good to be true, it is." I had to learn this lesson through a very painful and costly process, and while I would not wish such learning on anyone, I feel it is a very important lesson to have learned.
- beachstartup 13y agohypothetical question for someone who is knowledgeable about bitcoin: since bitcoin is an experiment, what happens if it completely fails? what does a total failure scenario even look like, in terms of symptoms? where does all the 'real' money go? i don't understand how 6% of bitcoin can disappear when one of the supposed selling points is that you can verify all the transactions.
- dobbsbob 13y agoWhat happens if it fails then you have a bunch of worthless coins. It's unlikely to 'fail'. Again, there has been a chorus of bitcointalk, reddit, *chan and IRC users warning people to stay away from being Goxed since 2011 so this exchange imploding due to incompetence is not a surprise at all. The bitcoins did not disappear. They are on the blockchain just somebody used a bug in Gox's custom php wallet to pillage all the coins for themselves. The official client bitcoind/bitcoin-qt is not affected, and none of the other major sites like blockchain.info or localbitcoins who keep large escrows were affected, just Gox and a drug dealing site who also rolled their own wallet and lost everybody's money. If you want to work with the raw bitcoin protocol you should pay a Bitcoin developer to help you, then these problems would be avoided. Karpales was making 6 million per month at one point, yet did everything himself (badly). You don't even need to pay them, log into bitcointalk.org and post in the dev base your custom implementation and ask them is this fail y/n?
- technotony 13y agoFailure is just people stop believing in it and the price falling to zero. Given the buzz and investment capital, I think it's unlikely the price actually goes to zero as there will be buyers stepping in when it falls. The coin disappears because it was stolen, or possibly deleted (less likely). It's not that different from someone taking cash out of your wallet.
- tlrobinson 13y ago"what does a total failure scenario even look like, in terms of symptoms?" The value of Bitcoins is determined by what other people are willing to pay for them, which is determined by their confidence people will exchange them for tangible goods or services, or other forms of money, in the future. Total failure means people lose confidence in the system, due to technical flaws, regulation, competition, etc. The value would approach $0/bitcoin, though I don't think it would reach zero for a long long time. I'd happily pay $10 for a million bitcoins just for the hell of it.
- karmicthreat 13y agoI really wish I had some BTC just to separate some fools from their money. Either through trading on the market or some sort of BTC based gambling. BTC isn't very liquid but I'd bet you could extract 50K in USD from it a year without too much trouble.
- ossreality 13y agoahahahahahahahahahahahahahahahahahahahahah ahahahahahahahahahahahahahahahahahahahahah ahahahahahahahahahahahahahahahahahahahahah
- mimog 13y ago>> I really wish I had some BTC So go and buy some
- talmand 13y agoHe'd be rich if only "something"...
- pmorici 13y agoThis is a bit bigger than Silk Road in terms of the amount of money people will probably lose but it wouldn't surprise me if something similar to the rally that followed the Silk Road take down happens. It's going to put Bitcoin in the news, this is the best entry price in the past 4 months, and Mt.Gox going under means the unethical players continue to shake out which can only be good.
- davidw 13y ago> Mt.Gox going under means the unethical players continue to shake out which can only be good. I'm not completely clear on the details (likely no one is), but it seems to me that the unethical players stole a lot of money and got away scot free. Lots of innocent people lost money, and yes mtgox, an incompetent player, will get shaken out. That doesn't exactly seem like a stellar outcome.
- pmorici 13y agoWhen I say unethical players I mean Mt.Gox who's master plan was apparently to hide their insolvency while at the same time creating enough uncertainty to tank the price so they could arbitrage their money problems away.
- davidw 13y agoWell, I meant the people actually stealing money, who don't seem to get mentioned much in this whole discussion. What Empty Gox has done is not really good or right or anything, but deliberately stealing is worse in my book.
- reality_czech 13y agoAll those arguments about whether or not they ever traded Magic: the Gathering cards look kind of frivolous now, DON'T THEY. Sounds like Bitcoin is about to have its Enron moment...
- trippy_biscuits 13y agoIt's interesting to watch ordinary people attempt to dabble in currency. How many criminal organizations, governments, and financial institutions (redundant?) the world over have people who wake up everyday just to manipulate the value of currency? For example, a common criticism of China is that they purposely manipulate their currency to devalue the US dollar. In which ways could such organizations impact a new currency like bitcoin? Simple theft doesn't work very well unless immediately converted to cash, just like tangible goods being fenced, often below true value. Was it really just theft?
- tdg 13y agoNot to be nitpicking but a common criticism of China is that they manipulate their currency to _increase_ the value of dollar not devalue it.
- eru 13y agoYes, the Chinese are hard at work to give Americans ever more manufactured goods for ever fewer green pieces of paper. (Or to be more accurately, entries in a data base.)
- hcal 13y agoI'm just an armchair economist, but I have read real economist argue that a strong US dollar limits the US's ability to repatriate it's manufacturing base. Also, I don't think China so much increases the dollar as it limits the growth of the Yuan in measure with technological and capital improvements that allow it to keep its export market strong and keep manufacturing business in China.
- eru 13y agoYes, that's essentially what I said. And I question whether getting stuff for cheaper (or free) is a bad thing for those downtrodden Americans.
- sp332 13y ago
- blueskin_ 13y agoSaw this coming a mile off. I hope the people who lost bitcoin learn not to keep them anywhere but in their own wallets.
- naterator 13y agoI came late to the Bitcoin party, so when I started mining other coins mid-last year the first thing I did was download the wallet client and encrypt, and backed it up. And I still didn't fully trust that my coins were safe, and that there wasn't some other bug in the protocol that could result in my coins getting stolen somehow (or at least confusion arising as to who owns them). I don't understand how people put so much trust in these exchanges as to have millions of dollars equivalent of coins there.
- tempestn 13y agoI think people (perhaps rationally) believe that the people running the exchanges know more about keeping bitcoins secure than they themselves do. The analogy would be that you're a lot safer putting your money in a bank than trying to keep it safe in your house. And certainly a company whose entire business is trading in bitcoin should know how to keep them safe. Unfortunately the reality is obviously sometimes different. Certainly you can keep your own coins essentially 100% safe relatively easily with encryption and backups, but most people wouldn't even think to try, let alone have the necessary knowledge to do so.
- eropple 13y ago> I think people (perhaps rationally) believe that the people running the exchanges know more about keeping bitcoins secure than they themselves do. There was nothing rational about this assumption. Banks are bonded and insured with teams of very, very good security professionals auditing their stuff. Mt fricking Gox? Not so much.
- talmand 13y agoI see this as more of how local banks were before government guarantees started being implemented. If someone robbed the bank it was your money they were taking and not the bank's. Heck, if the bank burned to the ground your money was gone. Made for a tighter community in some cases; you rob the bank the whole town hunts you down. What was a bank? Any person off the street with a safe in a building who claimed they could keep your money safe for you until you needed it. Sound familiar? Personally, I would have put about as much trust into these exchanges as I would have of those old banks.
- jbb555 13y agoI'm just hoping I can get home after work and buy some coins at the price the are now before it goes up again. I feel that this is mostly already discounted in the price, everyone was expecting it. It may drop further but it's not going to last. I should add that I only plan to spend perhaps 1% of my money available for saving/investing in bitcoin. I think it's a good investment but the risk is too high to risk more.
- bostonpete 13y ago1% doesn't seem like "good investment" money. Sounds more like a long shot investment...
- calhoun137 13y agofalse. that depends on the size of the bankroll.
- toolz 13y agoI think we call this diversification of your investments, not 'long shot' investing.
- yeukhon 13y agoI wonder if law enforcement is already questioning him; I am sure FBI has eyes on him already. Yes. I want him to come out and explain to us. Any employees should come out and give us insider stories. Whoever took advantage of this (whether it's criminal or Mt itself) should be punished.
- sp332 13y agoI'm pretty sure the FBI doesn't operate in Japan. (Not like that, anyway.)
- talmand 13y agoDoes the FBI even consider bitcoin as something that actually has any value that requires investigating an accusation of theft?
- sp332 13y agoSure, I mean the prices were listed by Mt Gox. No one involved in the transactions were claiming that the BTC were of no value. It's just more of a CIA thing :)
- dragonwriter 13y ago> Does the FBI even consider bitcoin as something that actually has any value that requires investigating an accusation of theft? ISTR that both the US Justice Department and at least one state government in the US has initiated prosecution based on the fact that Bitcoin is a thing with value, so probably.
- talmand 13y agoI would think they were more interested in the products being sold as compared to the made-up currency that was being used to purchase said products. But I haven't been following that case so I have to admit I have outdated info on that one.
- sorenbs 13y agoHow traceable are bitcoins. Suppose Gox released their logs, would it be possible to track when someone tried to offload the stolen bitcoins on one of the major exchanges? given the alleged value of the stolen coins are in the range of 0.5B USD it's not unreasonable to suspect that some government capacity would investigate this. If the stolen coins can indeed be detected - how would they go about extracting the value? Seems like a large scale, risky money laundry effort would be needed.
- wila 13y agoThe most interesting part in that text for me was "Released in 2009 by an anonymous creator known as Satoshi Nakamoto" It was news to me that the creator of the bitcoin technology is anonymous. Heard the name several times before, but never knew it was a pseudonym for an anonymous person or group of persons.
- nervousvarun 13y ago"He" used to post in various message boards at the beginning then abruptly stopped in 2011(http://www.coindesk.com/information/who-is-satoshi-nakamoto/ http://www.coindesk.com/information/who-is-satoshi-nakamoto/).
- gremlinsinc 13y agoTimes like these I'm glad I didn't have a dime in gox--but I was never trustful of them, they didn't to seem to be as legit to me as Coinbase or Bitpay -- I'm not 100% sold on some of the other exchanges either - coins-e has left me with a bad taste in my mouth when they held onto my dogecoins for 2 weeks during a transfer request... Luckily I have no money in BTC at all - other than 2k for mining equipment(scrypt) - and the coins earned from my small operation is only about 1 BTC so far -- which I'm planning on holding onto till it rallies, WHICH it will (too much investment money in too many companies) for it not to. Lots of companies have spent a lot of money to integrate it, and there will be a vacuum for a few weeks, maybe even months, but trust will come back into the market and it'll grow... One thing I'd like to see is some sort of P2P exchange service where exchanges don't happen on any network --ie all funds remain in wallet until time of exchange, -- of course this wouldn't work for usd necessarily, but for coin to coin exchanges it would, unless it was also tied into some sort of site like coinbase where they can store a fiat currency value like a bank for deposit at a later date.
- lucisferre 13y ago> WHICH it will (too much investment money in too many companies) for it not to. That sounds like bubble talk to me.