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It's easy to be angry at them and/or see how stupid they were about accounting, security, etc. But I guess on the other hand we do have to realize they are vic

by ck2 13y ago

It's easy to be angry at them and/or see how stupid they were about accounting, security, etc. But I guess on the other hand we do have to realize they are victims of massive theft, as far as we know this massive loss was not due to their own profiteering or internal theft, it was an organized outside force targeting them. It occurs to me it is like blaming someone for getting mugged, although they were stupid enough to walk down a really bad street at a bad time of night with their cash out in their hands, it did take a criminal to make the crime happen, not the victim.

buro9 13y ago
The word you are looking for is negligence.
- panacea 13y ago
  Negligence is when I forget to set my alarm.
bodski 13y ago
It seems it is too early to state with any certainty that MtGox are also a victim here. http://falkvinge.net/2014/02/28/the-gox-crater-crowd-detectives-reveal-billion-dollar-heist-as-inside-job/ http://falkvinge.net/2014/02/28/the-gox-crater-crowd-detecti... http://letstalkbitcoin.com/the-ghost-in-the-machine-at-mtgox/ http://letstalkbitcoin.com/the-ghost-in-the-machine-at-mtgox...
- deleted 13y ago
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- ck2 13y ago
  These are very interesting reads if only for the facts they lay out in detail.
- danielweber 13y ago
  The allegation that an address that MtGox's controls still holds all the Bitcoins but that they've lost the key is fascinating. If true, how can MtGox prove it lost the key? If he walks away, he can wait 10 years and then transfer the funds out and spend them. But if false, can we demand he produce the key? What if someone else entirely different has the key? It's all fascinating.
- whyenot 13y ago
  Another POV from Greg Maxwell (a Bitcoin core developer): Claims that MTGox has a lot of coin so far look completely spurious to me. https://www.reddit.com/r/Bitcoin/comments/1z3v4k/claims_that_mtgox_has_a_lot_of_coin_so_far_look/ https://www.reddit.com/r/Bitcoin/comments/1z3v4k/claims_that... In Falkvinge's case, it may be wishful thinking. He has also posted that he had 160 BTC and 1500 euros on Mt.Gox
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mertd 13y ago
Isn't it more like walking down the same bad street every night with other people's cash in their hands, getting mugged repeatedly, not telling anyone and still taking more money?
- ck2 13y ago
  This is a very good point. But they were also dumb enough not to realize they were getting mugged, or so they claim. Maybe I should have used "pick-pocketed" instead of mugged as an example. I am not trying to give them an excuse but we don't seem to have enough anger against the criminals that caused this.
  - deleted 13y ago
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  - vidarh 13y ago
    > But they were also dumb enough not to realize they were getting mugged, or so they claim. This is what I don't get, and which makes it hard to trust that they indeed "lost" this many coins. At the very least one would expect that for a company like this, they would regularly reconcile what the blockchain states the content of the wallets they control is, and what their internal customer records says should be there. That's the very barest minimum I'd expect anyone to do. And the moment they found a discrepancy they should have suspended everything until they'd figured out why there was a discrepancy. If they've truly managed to keep losing coins over years, it means they had no effective audit mechanisms in place at all. Whoever took these coins certainly also is to blame, but if they've managed to lose the coins that way, this ought to be criminal levels of negligence.
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pakitan 13y ago
I would have some sympathy for them, if they had shut down immediately after realizing they would not be able to pay their debts. Instead we were fooled with "everything is ok, we are reopening soon" PRs while massive insider trading was going on. Victims or not, the way they handled this is probably criminal.
nemof 13y ago
Not really. When someone gets mugged it's simple to be sympathetic to what's happened. When someone gets mugged and you gave them assets to hold and/or transfer, and they didn't take due care of the security of these assets, this makes them culpable and negligent. Yes, MtGox are probably having a really shit time right now, and yes I'd feel sorry for anyone who'd just fucked up this royally (assuming there was definitely no intent to defraud on their part), but that sympathy is tempered by a recognition that they've made the world vanish from under thousands of peoples feet as they see assets they trusted with the exchange float away into the ether. This is why managing risk and having rules that protects consumers is so useful. Everyone's a hedgefund investor until suddenly the rug gets pulled out from under their feet.
ghshephard 13y ago
"they are victims of massive theft," What leads you to believe this?
deleted 13y ago
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egeozcan 13y ago
You are running an antique accessory business. You have a van to carry all the valuable stuff you borrow from people to sell in their name. Your van starts to leak oil. You figure out how to fix it yourself. Check engine light of the van is still blinking though, but you happened to put a post-it in your dashboard blocking it. By the way, you also never have it serviced. You keep driving for years while the situation in your engine gets worse and worse. Finally, you end up causing an accident. You didn't have anything to protect your cargo even from a bumpy ride, let alone a crash. You lost too many of your antiques because you were carrying them around with you everywhere. You also don't have resources or any insurance to cover the expenses. You think it may be a good idea to hide this fact from your customers because the antique business in your town is still new and you don't want them to lose trust for the whole sector. You first tell your customers they can't sell or take back their stuff. Then you take off your signboard. Then you sell your van. You eventually close down your shop as well. Meanwhile, you keep telling them there is something wrong with how the van is designed, so you may have lost some valuables here and there. You end up filing for bankruptcy. Would this be just negligence?
- davedx 13y ago
  Sounds like the definition of gross negligence to me.
- fab13n 13y ago
  Indeed. However, the whole point of crypto-currencies is decentralization: you give up both (some of) the constraints and (most of) the protection that goes with government-backed currencies. Choosing who you trust then becomes your own problem, your fully personal responsibility. So yes, MtGox is at least criminally negligent, and maybe simply criminal. But the (largely libertarian) crowds who chose to trust them are fully responsible for their own poor assessment of MtGox' trustworthiness. That's the flip-side of choosing deregulation.
- aragot 13y ago
  Sounds like customers should have judged by themselves it wasnt a safe van to put your valuable antiques in.
steven2012 13y ago
Your analogy is terrible. They are actively in the financial services industry, and by default protection from criminals is one of their mandates. People put money into mtgox expecting them to be secure. They claimed to be secure. For them to turn around and lose 750,000 BTC is not analogous to being innocently mugged. It's more like a taxi driver guaranteeing a safe trip, actually driving drunk, then crashing and killing the passenger.
- aet 13y ago
  The point is that you should be prepared for this type of loss due to the speculative nature of Bitcoin. Here is a note from Morgan Stanley on alternative investments: Investing in alternative investments is speculative, not suitable for all clients, and intended for experienced and sophisticated investors who are willing to bear the high economic risks of the investment, which can include: -loss of all or a substantial portion of the investment due to leveraging, short-selling or other speculative investment practices; -lack of liquidity in that there may be no secondary market for the fund and none expected to develop; -volatility of returns; -restrictions on transferring interests in a fund; -potential lack of diversification and resulting higher risk due to concentration of trading authority when a single advisor is utilized; -absence of information regarding valuations and pricing; -delays in tax reporting; -less regulation and higher fees than mutual funds; -funds of hedge funds often have a higher fee structure than single manager funds as a result of the additional layers of fees; -risks associated with the operations, personnel, and processes of the manager.
jellicle 13y ago
Almost all theft at financial institutions is internal theft. There is not one single official statement from anyone to the effect that there has been an external theft from Mt. Gox. No one has reported a theft to police. There is zero basis to believe an external theft has occurred. If Mt. Gox does file a police report, at least then someone has done something (with official penalty for false statement) indicating that they believe a theft has occurred, and some possibly-accurate information would be available. But for now, there is nothing to stand behind a claim of external theft.
- deleted 13y ago
  [deleted]

by ck2 13y ago

buro9 13y ago

The word you are looking for is negligence.

panacea 13y ago
Negligence is when I forget to set my alarm.

bodski 13y ago

It seems it is too early to state with any certainty that MtGox are also a victim here. http://falkvinge.net/2014/02/28/the-gox-crater-crowd-detectives-reveal-billion-dollar-heist-as-inside-job/ http://falkvinge.net/2014/02/28/the-gox-crater-crowd-detecti... http://letstalkbitcoin.com/the-ghost-in-the-machine-at-mtgox/ http://letstalkbitcoin.com/the-ghost-in-the-machine-at-mtgox...

deleted 13y ago
[deleted]
ck2 13y ago
These are very interesting reads if only for the facts they lay out in detail.
danielweber 13y ago
The allegation that an address that MtGox's controls still holds all the Bitcoins but that they've lost the key is fascinating. If true, how can MtGox prove it lost the key? If he walks away, he can wait 10 years and then transfer the funds out and spend them. But if false, can we demand he produce the key? What if someone else entirely different has the key? It's all fascinating.
whyenot 13y ago
Another POV from Greg Maxwell (a Bitcoin core developer): Claims that MTGox has a lot of coin so far look completely spurious to me. https://www.reddit.com/r/Bitcoin/comments/1z3v4k/claims_that_mtgox_has_a_lot_of_coin_so_far_look/ https://www.reddit.com/r/Bitcoin/comments/1z3v4k/claims_that... In Falkvinge's case, it may be wishful thinking. He has also posted that he had 160 BTC and 1500 euros on Mt.Gox

deleted 13y ago

[deleted]

mertd 13y ago

Isn't it more like walking down the same bad street every night with other people's cash in their hands, getting mugged repeatedly, not telling anyone and still taking more money?

ck2 13y ago
This is a very good point. But they were also dumb enough not to realize they were getting mugged, or so they claim. Maybe I should have used "pick-pocketed" instead of mugged as an example. I am not trying to give them an excuse but we don't seem to have enough anger against the criminals that caused this.
- deleted 13y ago
  [deleted]
- vidarh 13y ago
  > But they were also dumb enough not to realize they were getting mugged, or so they claim. This is what I don't get, and which makes it hard to trust that they indeed "lost" this many coins. At the very least one would expect that for a company like this, they would regularly reconcile what the blockchain states the content of the wallets they control is, and what their internal customer records says should be there. That's the very barest minimum I'd expect anyone to do. And the moment they found a discrepancy they should have suspended everything until they'd figured out why there was a discrepancy. If they've truly managed to keep losing coins over years, it means they had no effective audit mechanisms in place at all. Whoever took these coins certainly also is to blame, but if they've managed to lose the coins that way, this ought to be criminal levels of negligence.

deleted 13y ago

[deleted]

pakitan 13y ago

I would have some sympathy for them, if they had shut down immediately after realizing they would not be able to pay their debts. Instead we were fooled with "everything is ok, we are reopening soon" PRs while massive insider trading was going on. Victims or not, the way they handled this is probably criminal.

nemof 13y ago

Not really. When someone gets mugged it's simple to be sympathetic to what's happened. When someone gets mugged and you gave them assets to hold and/or transfer, and they didn't take due care of the security of these assets, this makes them culpable and negligent. Yes, MtGox are probably having a really shit time right now, and yes I'd feel sorry for anyone who'd just fucked up this royally (assuming there was definitely no intent to defraud on their part), but that sympathy is tempered by a recognition that they've made the world vanish from under thousands of peoples feet as they see assets they trusted with the exchange float away into the ether. This is why managing risk and having rules that protects consumers is so useful. Everyone's a hedgefund investor until suddenly the rug gets pulled out from under their feet.

ghshephard 13y ago

"they are victims of massive theft," What leads you to believe this?

deleted 13y ago

[deleted]

egeozcan 13y ago

You are running an antique accessory business. You have a van to carry all the valuable stuff you borrow from people to sell in their name. Your van starts to leak oil. You figure out how to fix it yourself. Check engine light of the van is still blinking though, but you happened to put a post-it in your dashboard blocking it. By the way, you also never have it serviced. You keep driving for years while the situation in your engine gets worse and worse. Finally, you end up causing an accident. You didn't have anything to protect your cargo even from a bumpy ride, let alone a crash. You lost too many of your antiques because you were carrying them around with you everywhere. You also don't have resources or any insurance to cover the expenses. You think it may be a good idea to hide this fact from your customers because the antique business in your town is still new and you don't want them to lose trust for the whole sector. You first tell your customers they can't sell or take back their stuff. Then you take off your signboard. Then you sell your van. You eventually close down your shop as well. Meanwhile, you keep telling them there is something wrong with how the van is designed, so you may have lost some valuables here and there. You end up filing for bankruptcy. Would this be just negligence?

davedx 13y ago
Sounds like the definition of gross negligence to me.
fab13n 13y ago
Indeed. However, the whole point of crypto-currencies is decentralization: you give up both (some of) the constraints and (most of) the protection that goes with government-backed currencies. Choosing who you trust then becomes your own problem, your fully personal responsibility. So yes, MtGox is at least criminally negligent, and maybe simply criminal. But the (largely libertarian) crowds who chose to trust them are fully responsible for their own poor assessment of MtGox' trustworthiness. That's the flip-side of choosing deregulation.
aragot 13y ago
Sounds like customers should have judged by themselves it wasnt a safe van to put your valuable antiques in.

steven2012 13y ago

Your analogy is terrible. They are actively in the financial services industry, and by default protection from criminals is one of their mandates. People put money into mtgox expecting them to be secure. They claimed to be secure. For them to turn around and lose 750,000 BTC is not analogous to being innocently mugged. It's more like a taxi driver guaranteeing a safe trip, actually driving drunk, then crashing and killing the passenger.

aet 13y ago
The point is that you should be prepared for this type of loss due to the speculative nature of Bitcoin. Here is a note from Morgan Stanley on alternative investments: Investing in alternative investments is speculative, not suitable for all clients, and intended for experienced and sophisticated investors who are willing to bear the high economic risks of the investment, which can include: -loss of all or a substantial portion of the investment due to leveraging, short-selling or other speculative investment practices; -lack of liquidity in that there may be no secondary market for the fund and none expected to develop; -volatility of returns; -restrictions on transferring interests in a fund; -potential lack of diversification and resulting higher risk due to concentration of trading authority when a single advisor is utilized; -absence of information regarding valuations and pricing; -delays in tax reporting; -less regulation and higher fees than mutual funds; -funds of hedge funds often have a higher fee structure than single manager funds as a result of the additional layers of fees; -risks associated with the operations, personnel, and processes of the manager.

jellicle 13y ago

Almost all theft at financial institutions is internal theft. There is not one single official statement from anyone to the effect that there has been an external theft from Mt. Gox. No one has reported a theft to police. There is zero basis to believe an external theft has occurred. If Mt. Gox does file a police report, at least then someone has done something (with official penalty for false statement) indicating that they believe a theft has occurred, and some possibly-accurate information would be available. But for now, there is nothing to stand behind a claim of external theft.

deleted 13y ago
[deleted]