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Ask HN: Where are the 750k Bitcoins lost by Mt. Gox?

218 points by pmcpinto 13y ago

sillysaurus3 13y ago
Some info here: http://www.reddit.com/r/Bitcoin/comments/1z37zw/mt_gox_has_at_least_200k_btc/ http://www.reddit.com/r/Bitcoin/comments/1z37zw/mt_gox_has_a... "MtGox still has at least 200k BTC" Here are the possibilities, as far as I can tell: 1) That information is inaccurate. 2) MtGox lost their private keys. 3) The private keys were kept in a bank vault, which was seized by a foreign entity like the US government at some earlier time. 4) MtGox stole the coins. The management of MtGox knows which of these is correct, but they probably aren't going to say.
- bachback 13y ago
  5) they were stolen
  - zbowling 13y ago
    that is #2
    - pera 13y ago
      not exactly the same, one bad actor owning that amount of bitcoins would be scary: for example, this person could first trade otc one fraction after mixing, second talk with some entity that hates bitcoin (say jpmorgan) and tell them that you can sell the rest in the open market (on every big exchange) sending the price to 0 (literally), get profits and powerful new friends from doing this. The situation doesn't looks good.
  - raphaelj 13y ago
    Which is the same as 2) and 3).
    - shawabawa3 13y ago
      No, could have been stolen through bugs in their software (e.g. transaction maleability), not directly from stealing the keys
aroch 13y ago
"In the blockchain". Assuming they weren't lost because someone forgot a password, all of the BTC lost / stolen in transaction malleability are traceable. Whether or not its feasible to check every transaction from Gox over the last few years and add up all the partial BTC is something I can't comment on.
- knodi 13y ago
  there are top men working on this very thing.
deleted 13y ago
[deleted]
k3oni 13y ago
I have to go with the following answer: in someone's pocket.
- Piskvorrr 13y ago
  A pocket of someone who had means, opportunity, and motive? Hmmm...
  - k3oni 13y ago
    That's my thought as all of it sounds really shady.. time will tell.
  - shawabawa3 13y ago
    If you're thinking Mark Karpeles, he doesn't really have motive as he's likely going to go to jail. However, an employee or contractor at mtgox who figured he could cover his tracks could have stolen them
bushido 13y ago
With the possibility of getting down voted into oblivion. The BTC lost/stolen are all available within blockchain/public ledger. Depending on who stole them, it would probably be distributed within multiple very smaller transaction. It my be traceable, but likely unrecoverable, because this is a feature of Bitcoin. In other words authorities and forensic enthusiasts can find the BTC but they are most likely lost at the same time.
- hartator 13y ago
  I wouldn't be that pessismistic. If people manage to identify people behind the blockchains, I strongly suppose that law enforcements, depending on countries where the theift physically is, can force the thieft to give it back without any modifications to existing laws. I think we can catch him when he is going to want to laundry his bitcoins.
  - tommo123 13y ago
    Don't bitcoin tumbling services pretty much make it logistically impossible to follow the path of bitcoins if they cycle it enough? Also I wouldn't rely on the governments to do much to return people's investments in a currency they already distrust. In fact, considering the historic and contemporary roles the US and the IMF have had in deliberately destabilising and undermining international economies/currencies, you'd be naive to remove first world governments from the list of suspects. The incentive is even higher for them than normal thieves -- not only do they already have an established system for laundering stolen money, but they don't even need to remove the money to profit, they just need to steal it and render it inaccessible. The credibility of Bitcoin as an extranational, anonymous currency has been dealt a serious blow and, if you consider bitcoin a threat to the current institutions, then that has a value far greater than the few hundred million that they'd wind up with in pocket. I'm not throwing around any conspiracy theories here because there's no evidence for it so far, but I don't think there's anyone foolish enough to pretend that the US/UK/etc governments haven't already been in this ethical sphere of operations for decades. The first question was whether they have the werewithall to operate on this level technologically (confirmed by Snowden), and the second is whether they consider bitcoin a threat.
fredgrott 13y ago
Here s an idea.. Feds sized silk road and the Bitcoin wallets If any was stored or transacted at MTGox this might be some of the amount of losses MTGOX is now showing but NOT ALL OF The lOSSeS obviously
- jnbiche 13y ago
  Bingo. The Feds seized their cold wallet somehow. Mark has said repeatedly that Mt. Gox is under investigation and that he can't talk about it. There's a supposed IRC log from two days ago where he let it slip that he's under a gag order, saying two days ago "le gouv US ne veut pas qu'on disclose" (the US gov. doesn't want us to say anything)[0]. And he's said in public that he can't discuss the matter since he's under investigation. So my guess is that the feds have seized his cold wallet as part of the Silk Road investigation, or even as part of the case against Mt. Gox itself, which was probably in a safety deposit box. They've already seized 5 million USD last year from Gox, why wouldn't they go after the Bitcoins, too? And yes, the seized Bitcoins would not equal the number owed, but my guess is that they're the majority of them, say 80%. If that's the case, account holders would have to petition the USD to prove they're not drug dealers and or tax evaders to get their money back.
  - tommo123 13y ago
    I like that. "Prove you're not a drug dealer and we'll see if there's still money to return." It kind of gives the middle fingers to 3 somewhat-important US rights: the right to not self-incriminate (being coerced into providing new evidence that might be used against you), being considered innocent until proven guilty (assets seized without an active case against you), and that everyone is equal under the law (unless we say you're a drug dealer (or, going back 60 years, black)).
    - rst 13y ago
      There would be precedent, in the form of cash seizure "civil forfeiture" proceedings at both the State and Federal level: http://www.newyorker.com/reporting/2013/08/12/130812fa_fact_stillman?currentPage=all http://www.newyorker.com/reporting/2013/08/12/130812fa_fact_...
eterm 13y ago
This is another possibility people are overlook, that perhaps they never had them. Perhaps they simply built up a liability of 800k bitcoins by trading on their own exchange and making some bad calls.
- drcode 13y ago
  If I had to venture a guess, I'd bet that not even Mark Karpeles knows what happened to the money.
dirktheman 13y ago
Somewhere in the blockchain, probably divided into smaller chunks. The way Bitcoin is set up, you can follow transactions, but it's very hard to track buyers/sellers. It's a paradox: Bitcoin's strength is that it's untraceable and unregulated, but in cases like this those exact strengths are pitfalls at the same time.
- jarek 13y ago
  That is not a paradox at all. Bitcoin as a system is performing exactly as designed here (barring possible wibbly wobbly "malleability" bugs).
davidw 13y ago
"The Lost BitCoins of Mt Gox" sounds like a good Scooby Doo episode. Or Hardy Boys?
- colinbartlett 13y ago
  Velma yanks off mask. Daphne gasps "Mr. Karpeles!" Fred: "Mark Karpeles was the thief all along!" Karpeles: "And I would have gotten away with it, too, if it hadn't been for you meddling kids!"
  - krishnasrinivas 13y ago
    haha :-) upvoting this.
  - terranstyler 13y ago
    Velma didn't even say Jinkies yet :(
- rkuykendall-com 13y ago
  Sherlock Holmes novel.
yread 13y ago
Why doesn't Mt. Gox just publish the ID of the wallet(s) from which they were stolen? 1. They weren't stolen - lost in cold storage harddisk failure for example 2. Revealing it would show something extremely embarrassing - they only used a single wallet? 3. They still have them - yay? 4. They were stolen by Mt. Gox - gulp
- drcode 13y ago
  MtGox may just have larger problems right now and can't get around to the actuarial work involved. Though I agree a cold storage failure is still a good possibility, given the poor communication.
- pmorici 13y ago
  Can anything they say or do be trusted at this point? I mean regardless of exactly how it happened weather it was theft, insider theft, incompetence, or blackmail Gox is not a party worthy of implicit trust any longer.
- Crito 13y ago
  2a. Revealing it would show that although they did not commit the current theft, they have been running another unrelated scheme.
badman_ting 13y ago
Does it matter? Edit: Not "does it matter that they are lost", but rather "since they are lost, does it matter where they are".
- aurumpotest 13y ago
  Well, yes, to a lot of people - both those who lost money in the affair (some people vast amounts), and also to anyone interested in following the development of BTC - if this was theft, how can we prevent repeat incidents to reassure potential Bitcoin buyers; if it was a failure in the technology, what can we do to repair that to make Bitcoin more secure, or if there was some government or official organisations involved, why did they interfere and what're they up to?
  - badman_ting 13y ago
    Too glib I suppose, I just meant that if the coins are "out there" they're not actually recoverable, are they? If a bunch of sand falls out of my hand on the beach, those grains didn't disappear but I'm never getting them back again. Then there's the very real question of whether it actually is theft. I would argue no, in the sense that downloading a song isn't theft. You play in dirt, you get dirty. You want an unregulated purely digital currency with irrevocable transactions, you know it's going to sting if you lose some of it.
- tjaerv 13y ago
  There are already reports of two suicides related to the Mt.Gox fiasco, so yes, it does matter. 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...
deweller 13y ago
In November of 2011 Mt. Gox demonstrated control of 500k BTC. I followed the 500,000 BTC for a bit beginning at https://blockchain.info/tx/b269bf1b82dae8a61f7f91dbf7a9d807e30963c1ae00ddd95a8faebea6d0a007 https://blockchain.info/tx/b269bf1b82dae8a61f7f91dbf7a9d807e.... The coins move around and small amounts are sent away, but the majority ends up back in Mt. Gox's main (hot) wallet. This repeats a few times until the majority is paid back to the main Mt.Gox address. Here is the transaction where it starts to get interesting: https://blockchain.info/tx/478ea915aa3a2e54503c43e1c5659722b42a784412423a05394c83a44affb805 https://blockchain.info/tx/478ea915aa3a2e54503c43e1c5659722b... What's left of the 500,000 (429.9k) is split into roughly half and sent to 2 new address. And then each of those address splits the coins in half and sends to two new address. The end result is that the 429k was split again and again until the funds are split into many addresses, each of which now contain less than 1,000 BTC each. I stopped following the transactions there. Why take 429k and split it into many addresses each containing less than 1,000 BTC each? I'd like to see someone trace all of these coins and see if they end up coming together somewhere or show a pattern.
- neals 13y ago
  Can anybody follow one of these "branches" until the very last known transaction on the blockchain? Would that clear anything up?
  - drcode 13y ago
    Yeah, people have been trying all kinds of analysis on these addresses on r/bitcoin this week- So far the jury is out as to whether meaningful info can be gathered in this way.
  - deweller 13y ago
    I haven't seen anyone do a comprehensive analysis yet. I assume someone is working on this. But maybe everyone else thinks that too. Here is a some background information at Let's Talk Bitcoin: http://letstalkbitcoin.com/the-ghost-in-the-machine-at-mtgox http://letstalkbitcoin.com/the-ghost-in-the-machine-at-mtgox
  - 13y ago
zacinbusiness 13y ago
So if the bitcoins are seized by some government entity....wouldn't that make the total value of bitcoin go up? Supply and demand and all that... Again, I know very, very little about bitcoin or economics in general.
- theklub 13y ago
  Yes and no in my opinion. Because while the total supply goes down, some confidence is also lost (at least short term).
- jsaxton86 13y ago
  An interesting idea, but it assumes that the demand doesn't change after a government seized a large number of BTC.
- glesica 13y ago
  Depending on whether people viewed the seizure as permanent or not, it would reduce the number of available bitcoins and, theoretically, cause a price increase. However, that assumes the volume of bitcoins demanded didn't also go down, which would most likely also happen since a large-scale seizure would reduce confidence in bitcoin and cause fewer people to use them (and many people holding them to try to sell them for traditional currency).
- zeidrich 13y ago
  Bitcoins have no intrinsic value. They only have value in trade. If I started my own currency called a superdollar, and I had the only superdollar in existence, it would be worthless, despite the fact that it was very rare. If a foreign entity can make the bitcoins you have disappear, that leads to less confidence in your ability to use the bitcoins for trade. The fact that there's fewer out there doesn't mean yours are more valuable. The number of bitcoins has been constantly increasing, yet the price has been going steadily up as well. That's because they've become more trusted, more usable. More places will accept them in trade, and more exchanges exist. When places like Mt. Gox fail, or fear that foreign entities have the ability to essentially rob the banks with impunity, it makes the currency less trusted. Consider this. The government issues a currency called digibux. They are matched to the USD, you can buy one digibuck for 1 USD, but they are limited in volume, only so many are offered. Looking at this naively, digibux has the same value as USD. Now consider the following happens, the government takes down a giant drug operation, and invalidates all of the digibux that were involved in the operation. A friend of yours who was a pizza delivery guy has hundreds of dollars removed from his digital wallet because they were tips from people who had participated in the drug trade. Now you're sitting with 10,000 digibux, and you know that the government is pleased with the results of the previous sting and wants to set up more operations like that. Someone offers you 8,000 USD for your 10,000 digibux. You know that the 8,000 USD can never just vanish. The number of digibux in circulation went down. But did that make the total value of digibux go up?
tudorizer 13y ago
"Lost" is such a harsh word. They are still here, in the blockchain.
jackgavigan 13y ago
There have been hints that MtGox's losses were due exploitation of the transaction malleability issue. I don't know if it's possible to identify (from the blockchain) transactions that have been altered in a way that exploits the malleability issue but it should certainly be possible to identify pairs of transactions with identical startpoints, endpoints and sizes (i.e. number of bitcoins). If it turned out that pairs of such transactions turned out to come from MtGox's wallets to third-party wallets, that would probably be a good starting point.
- colinbartlett 13y ago
  I would be surprised if that was simply a ploy by Mt. Gox to deflect blame from their own ineptitude.
tjaerv 13y ago
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...
the_watcher 13y ago
Since the story seems to be that this has been going on for years without anyone investigating, I'd guess that most of them are long since laundered and distributed between various innocent bystanders. Even if we could trace every single uBTC to it's current location, the percentage actually held by those responsible has got to be very small.
uslic001 13y ago
Any truth to the claims made on this website? http://www.doctrackr.com/blog/bid/376566/409-Million-in-Bitcoin-Stolen-Who-is-to-Blame?utm_source=hacker-news&utm_medium=social&utm_term=post&utm_content=ddos-attacks&utm_campaign=Blog-Post-2-28 http://www.doctrackr.com/blog/bid/376566/409-Million-in-Bitc... "The Pony botnet attack was an ambitious data collection program. TrustWave reported staggering data loss statistics from the event the following sensitive information was stolen. 1,580,000 website login credentials 320,000 email account credentials 41,000 FTP account credentials 3,000 Remote Desktop credentials 3,000 Secure Shell account credentials Pony’s attack on the Bitcoin community took down the worlds largest Bitcoin exchange, and caused the price of Bitcoin to plummet. The attack reinforced security concerns over the currency. Can confidence in Bitcoin recover?"
corresation 13y ago
To reply to a recurring line of thought, Bitcoins are not atomic entities with serial numbers like dollar bills. You can't say "Bitcoin #AE472b was stolen" and then trace it through its life, or blacklist it. Instead Bitcoin is a ledger that details wallets and accounts. The origin of balances came from mining, and then people made transactions that, on the official ledger, transferred some or all of those amounts to other wallets. And on, and on, and on. Hypothetically, if the community were foolhardy enough to trust someone's list of "recipients of mislaid money" wallet ids, you could blacklist those wallets, or even, through group agreement, force transfers back. But that's where tumblers come in: Tumblers are group wallets that take transactions in from all sorts, and then distribute them anonymously to new wallets you control (after a service fee, of course). Anyone hiding their tracks will of course have used a tumbler, often anonymously run on the Tor network. Do you blacklist or reclaim from every wallet that took an output from a tumbler? Bitcoin would be toast. Tumblers are something that legitimate users of the currency make use of. You won't get the cooperation of tumbler operators because they are themselves engaged in a very serious crime. So the trace-ability claim repeatedly being made just doesn't hold when you have legitimate and illegitimate transactions by the millions all intermixed. When bitcoins are transferred...game over. Give up on that thought.
- badman_ting 13y ago
  Right, exactly. It just seems hopeless to try to figure out "where they are". They're drops of water in the ocean.
- wpietri 13y ago
  In this particular case, are tumblers viable? If I understand rightly, the stolen coins here are a significant percentage of the amount of bitcoins outstanding.
  - corresation 13y ago
    Supposedly this looting went on for years, death by a thousand transfers. It will have dissolved into the sea by now.
brudgers 13y ago
I suspect that the bitcoins have been exchanged for something else and are back circulating around. The beauty of the heist is that any bitcoin in circulation invariably passes through transactions where the parties have a compelling interest in not being attached to the transaction. After finding a stolen bitcoin, unravelling its history back to the Mt. Gox Heist is likely to meet a wall of resistence - e.g. if it passed through Silk Road the parties on both sides will be reluctant to come forward and provide information. In terms of a tort, is it civil or criminal? Was the loss of the coins by Mt. Gox simply an unsatisfactory business transaction? Supposing there was a theft, how should the bitcoins be valued? By the amount of storage space they consume, by the cost of the resources required to create them? If by some market price, which one - some average at the time of their creation, at the time of their loss, at the time of their recovery, or at the time of the prosecution? Many of those values are zero. Finally, how many of Mt. Gox's customers are going to come forward and claim ownership if such claims are accompanied by a risk of being asked "And how came you to acquire these bitcoins?" Unlike fiat currency, no government has an interest in supporting the agreed upon fiction that bitcoins are not a fiction. Stealing cash is a crime because the government has an interest in cash being an asset. The problem with cryptocurrency is the proportion of black and grey market interests it attracts. With bitcoin, they were there first and good citizens second. Separating good citizens from their money was always going to be an attractive option, probably more attractive than separating participants in the black and grey markets from theirs given the greater potential for more serious reprisals which might accompany theft. It's been over since the first Bitcoin story on NPR.
nickmolnar2 13y ago
Wouldn't the sheer number of coins involved make tumbling services almost useless. What is the volume that a single tumbler gets per day? If you put in tens of thousands of coins, and there are only a few dozen coins in the Tumblr that day, your coins are going to be most of what comes back.
- dragonwriter 13y ago
  > Wouldn't the sheer number of coins involved make tumbling services almost useless. Sure, if they were all stolen and tumbled at once. The descriptions of a cold storage "leak" suggest that if the loss was due to theft, it was a gradual over an extended period.
zerocored 13y ago
Things like these are bound to fall. People should have predicted this risk.
ZeWaren 13y ago
What if Satoshi Nakamoto stole them?
rikacomet 13y ago
So what happens next? -The government has no inclination to interfere (even though many US citizens lost their money) as they were against it (if not outright criminalizing it). - The lost money, even if recovered in full, would not be the same. The time lost is money lost. Besides the emotional shock and pain people had to take. - Someone somewhere is sitting on that money, and it will have value, because people won't stop trading Bitcoin even now. I know people are not ready to take any criticism of bitcoin, but here it is, what needs to be fixed about it.
oskarth 13y ago
Here's what I would do if I stole 750k Bitcoins. 1. Split the wallet up into as many wallets as possible. Preferably by transferring them through a couple hundred compromised (but not emptied) accounts. 2. Sell each individual wallet of say, 100-1000 BTC, on the black market. Make sure the transaction happens outside the transaction chain (i.e. either in real life or using other wallets with some kind of alternative trust system). 3. Be prepared to lose 5-20% of the value, in exchange for turning the money "white". If the money was stolen and the people who took it aren't stupid, I don't see how someone is ever going to find it.
- bdevine 13y ago
  Of course, the more wallets you create and sell, the higher the probability that at least one of their buyers is stupid.
junto 13y ago
Whilst the numbers quoted in US dollar terms are quite staggering, I would be interested to know what the actual losses are based on the initial investment dollar amount. I'm guessing many of these coins were mined or bought before the astronomical price rises. Of course I understand that that is irrelevant to people who have perceived millions of USD, but interesting nevertheless.
- danudey 13y ago
  This is an interesting point. This value is all speculative until the it's resolved by conversion to another currency. The entirety of my LTC holdings are from mining coins, trading out to USD before it dropped, then 'buying' in again. I ended up with around five hundred bucks worth, mostly due to just smart trading, costing me nothing. The value has recently dropped, and I'm sad that I didn't cash out before, but I didn't actually lose anything. I'm still up the entire value of my portfolio, I'm just not up as much as I was before (and could have cashed out at). I do feel bad for the people who bought in and then lost it all.
elif 13y ago
Instead of a blacklist which is tantamount to centralized regulation, there can be a concerted effort by the community to publicly shame people using these coins, or tumblers, merchants, services, etc. which accept them.
gremlinsinc 13y ago
Wouldn't it be funny if the lost bitcoins---were all the result of someone forgetting where they put the key? So not stolen, just literally lost? Talk about a major 'oops' moment.
ryanSrich 13y ago
They are most likely being held by the U.S. Government. http://www.reddit.com/r/BitcoinMarkets/comments/1z2xo5/speculation_the_us_government_has_control_of_goxs/ http://www.reddit.com/r/BitcoinMarkets/comments/1z2xo5/specu...
bitcoinlive 13y ago
Crypto currency news @ http://cryptocurrencylive.com/newest http://cryptocurrencylive.com/newest

218 points by pmcpinto 13y ago

Some info here: http://www.reddit.com/r/Bitcoin/comments/1z37zw/mt_gox_has_at_least_200k_btc/ http://www.reddit.com/r/Bitcoin/comments/1z37zw/mt_gox_has_a... "MtGox still has at least 200k BTC" Here are the possibilities, as far as I can tell: 1) That information is inaccurate. 2) MtGox lost their private keys. 3) The private keys were kept in a bank vault, which was seized by a foreign entity like the US government at some earlier time. 4) MtGox stole the coins. The management of MtGox knows which of these is correct, but they probably aren't going to say.

bachback 13y ago
5) they were stolen
- zbowling 13y ago
  that is #2
  - pera 13y ago
    not exactly the same, one bad actor owning that amount of bitcoins would be scary: for example, this person could first trade otc one fraction after mixing, second talk with some entity that hates bitcoin (say jpmorgan) and tell them that you can sell the rest in the open market (on every big exchange) sending the price to 0 (literally), get profits and powerful new friends from doing this. The situation doesn't looks good.
- raphaelj 13y ago
  Which is the same as 2) and 3).
  - shawabawa3 13y ago
    No, could have been stolen through bugs in their software (e.g. transaction maleability), not directly from stealing the keys

aroch 13y ago

"In the blockchain". Assuming they weren't lost because someone forgot a password, all of the BTC lost / stolen in transaction malleability are traceable. Whether or not its feasible to check every transaction from Gox over the last few years and add up all the partial BTC is something I can't comment on.

knodi 13y ago
there are top men working on this very thing.

deleted 13y ago

[deleted]

k3oni 13y ago

I have to go with the following answer: in someone's pocket.

Piskvorrr 13y ago
A pocket of someone who had means, opportunity, and motive? Hmmm...
- k3oni 13y ago
  That's my thought as all of it sounds really shady.. time will tell.
- shawabawa3 13y ago
  If you're thinking Mark Karpeles, he doesn't really have motive as he's likely going to go to jail. However, an employee or contractor at mtgox who figured he could cover his tracks could have stolen them

bushido 13y ago

With the possibility of getting down voted into oblivion. The BTC lost/stolen are all available within blockchain/public ledger. Depending on who stole them, it would probably be distributed within multiple very smaller transaction. It my be traceable, but likely unrecoverable, because this is a feature of Bitcoin. In other words authorities and forensic enthusiasts can find the BTC but they are most likely lost at the same time.

hartator 13y ago
I wouldn't be that pessismistic. If people manage to identify people behind the blockchains, I strongly suppose that law enforcements, depending on countries where the theift physically is, can force the thieft to give it back without any modifications to existing laws. I think we can catch him when he is going to want to laundry his bitcoins.
- tommo123 13y ago
  Don't bitcoin tumbling services pretty much make it logistically impossible to follow the path of bitcoins if they cycle it enough? Also I wouldn't rely on the governments to do much to return people's investments in a currency they already distrust. In fact, considering the historic and contemporary roles the US and the IMF have had in deliberately destabilising and undermining international economies/currencies, you'd be naive to remove first world governments from the list of suspects. The incentive is even higher for them than normal thieves -- not only do they already have an established system for laundering stolen money, but they don't even need to remove the money to profit, they just need to steal it and render it inaccessible. The credibility of Bitcoin as an extranational, anonymous currency has been dealt a serious blow and, if you consider bitcoin a threat to the current institutions, then that has a value far greater than the few hundred million that they'd wind up with in pocket. I'm not throwing around any conspiracy theories here because there's no evidence for it so far, but I don't think there's anyone foolish enough to pretend that the US/UK/etc governments haven't already been in this ethical sphere of operations for decades. The first question was whether they have the werewithall to operate on this level technologically (confirmed by Snowden), and the second is whether they consider bitcoin a threat.

fredgrott 13y ago

Here s an idea.. Feds sized silk road and the Bitcoin wallets If any was stored or transacted at MTGox this might be some of the amount of losses MTGOX is now showing but NOT ALL OF The lOSSeS obviously

jnbiche 13y ago
Bingo. The Feds seized their cold wallet somehow. Mark has said repeatedly that Mt. Gox is under investigation and that he can't talk about it. There's a supposed IRC log from two days ago where he let it slip that he's under a gag order, saying two days ago "le gouv US ne veut pas qu'on disclose" (the US gov. doesn't want us to say anything)[0]. And he's said in public that he can't discuss the matter since he's under investigation. So my guess is that the feds have seized his cold wallet as part of the Silk Road investigation, or even as part of the case against Mt. Gox itself, which was probably in a safety deposit box. They've already seized 5 million USD last year from Gox, why wouldn't they go after the Bitcoins, too? And yes, the seized Bitcoins would not equal the number owed, but my guess is that they're the majority of them, say 80%. If that's the case, account holders would have to petition the USD to prove they're not drug dealers and or tax evaders to get their money back.
- tommo123 13y ago
  I like that. "Prove you're not a drug dealer and we'll see if there's still money to return." It kind of gives the middle fingers to 3 somewhat-important US rights: the right to not self-incriminate (being coerced into providing new evidence that might be used against you), being considered innocent until proven guilty (assets seized without an active case against you), and that everyone is equal under the law (unless we say you're a drug dealer (or, going back 60 years, black)).
  - rst 13y ago
    There would be precedent, in the form of cash seizure "civil forfeiture" proceedings at both the State and Federal level: http://www.newyorker.com/reporting/2013/08/12/130812fa_fact_stillman?currentPage=all http://www.newyorker.com/reporting/2013/08/12/130812fa_fact_...

eterm 13y ago

This is another possibility people are overlook, that perhaps they never had them. Perhaps they simply built up a liability of 800k bitcoins by trading on their own exchange and making some bad calls.

drcode 13y ago
If I had to venture a guess, I'd bet that not even Mark Karpeles knows what happened to the money.

dirktheman 13y ago

Somewhere in the blockchain, probably divided into smaller chunks. The way Bitcoin is set up, you can follow transactions, but it's very hard to track buyers/sellers. It's a paradox: Bitcoin's strength is that it's untraceable and unregulated, but in cases like this those exact strengths are pitfalls at the same time.

jarek 13y ago
That is not a paradox at all. Bitcoin as a system is performing exactly as designed here (barring possible wibbly wobbly "malleability" bugs).

davidw 13y ago

"The Lost BitCoins of Mt Gox" sounds like a good Scooby Doo episode. Or Hardy Boys?

colinbartlett 13y ago
Velma yanks off mask. Daphne gasps "Mr. Karpeles!" Fred: "Mark Karpeles was the thief all along!" Karpeles: "And I would have gotten away with it, too, if it hadn't been for you meddling kids!"
- krishnasrinivas 13y ago
  haha :-) upvoting this.
- terranstyler 13y ago
  Velma didn't even say Jinkies yet :(
rkuykendall-com 13y ago
Sherlock Holmes novel.

yread 13y ago

Why doesn't Mt. Gox just publish the ID of the wallet(s) from which they were stolen? 1. They weren't stolen - lost in cold storage harddisk failure for example 2. Revealing it would show something extremely embarrassing - they only used a single wallet? 3. They still have them - yay? 4. They were stolen by Mt. Gox - gulp

drcode 13y ago
MtGox may just have larger problems right now and can't get around to the actuarial work involved. Though I agree a cold storage failure is still a good possibility, given the poor communication.
pmorici 13y ago
Can anything they say or do be trusted at this point? I mean regardless of exactly how it happened weather it was theft, insider theft, incompetence, or blackmail Gox is not a party worthy of implicit trust any longer.
Crito 13y ago
2a. Revealing it would show that although they did not commit the current theft, they have been running another unrelated scheme.

badman_ting 13y ago

Does it matter? Edit: Not "does it matter that they are lost", but rather "since they are lost, does it matter where they are".

aurumpotest 13y ago
Well, yes, to a lot of people - both those who lost money in the affair (some people vast amounts), and also to anyone interested in following the development of BTC - if this was theft, how can we prevent repeat incidents to reassure potential Bitcoin buyers; if it was a failure in the technology, what can we do to repair that to make Bitcoin more secure, or if there was some government or official organisations involved, why did they interfere and what're they up to?
- badman_ting 13y ago
  Too glib I suppose, I just meant that if the coins are "out there" they're not actually recoverable, are they? If a bunch of sand falls out of my hand on the beach, those grains didn't disappear but I'm never getting them back again. Then there's the very real question of whether it actually is theft. I would argue no, in the sense that downloading a song isn't theft. You play in dirt, you get dirty. You want an unregulated purely digital currency with irrevocable transactions, you know it's going to sting if you lose some of it.
tjaerv 13y ago
There are already reports of two suicides related to the Mt.Gox fiasco, so yes, it does matter. 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...

deweller 13y ago

In November of 2011 Mt. Gox demonstrated control of 500k BTC. I followed the 500,000 BTC for a bit beginning at https://blockchain.info/tx/b269bf1b82dae8a61f7f91dbf7a9d807e30963c1ae00ddd95a8faebea6d0a007 https://blockchain.info/tx/b269bf1b82dae8a61f7f91dbf7a9d807e.... The coins move around and small amounts are sent away, but the majority ends up back in Mt. Gox's main (hot) wallet. This repeats a few times until the majority is paid back to the main Mt.Gox address. Here is the transaction where it starts to get interesting: https://blockchain.info/tx/478ea915aa3a2e54503c43e1c5659722b42a784412423a05394c83a44affb805 https://blockchain.info/tx/478ea915aa3a2e54503c43e1c5659722b... What's left of the 500,000 (429.9k) is split into roughly half and sent to 2 new address. And then each of those address splits the coins in half and sends to two new address. The end result is that the 429k was split again and again until the funds are split into many addresses, each of which now contain less than 1,000 BTC each. I stopped following the transactions there. Why take 429k and split it into many addresses each containing less than 1,000 BTC each? I'd like to see someone trace all of these coins and see if they end up coming together somewhere or show a pattern.

neals 13y ago
Can anybody follow one of these "branches" until the very last known transaction on the blockchain? Would that clear anything up?
- drcode 13y ago
  Yeah, people have been trying all kinds of analysis on these addresses on r/bitcoin this week- So far the jury is out as to whether meaningful info can be gathered in this way.
- deweller 13y ago
  I haven't seen anyone do a comprehensive analysis yet. I assume someone is working on this. But maybe everyone else thinks that too. Here is a some background information at Let's Talk Bitcoin: http://letstalkbitcoin.com/the-ghost-in-the-machine-at-mtgox http://letstalkbitcoin.com/the-ghost-in-the-machine-at-mtgox
- 13y ago

zacinbusiness 13y ago

So if the bitcoins are seized by some government entity....wouldn't that make the total value of bitcoin go up? Supply and demand and all that... Again, I know very, very little about bitcoin or economics in general.

theklub 13y ago
Yes and no in my opinion. Because while the total supply goes down, some confidence is also lost (at least short term).
jsaxton86 13y ago
An interesting idea, but it assumes that the demand doesn't change after a government seized a large number of BTC.
glesica 13y ago
Depending on whether people viewed the seizure as permanent or not, it would reduce the number of available bitcoins and, theoretically, cause a price increase. However, that assumes the volume of bitcoins demanded didn't also go down, which would most likely also happen since a large-scale seizure would reduce confidence in bitcoin and cause fewer people to use them (and many people holding them to try to sell them for traditional currency).
zeidrich 13y ago
Bitcoins have no intrinsic value. They only have value in trade. If I started my own currency called a superdollar, and I had the only superdollar in existence, it would be worthless, despite the fact that it was very rare. If a foreign entity can make the bitcoins you have disappear, that leads to less confidence in your ability to use the bitcoins for trade. The fact that there's fewer out there doesn't mean yours are more valuable. The number of bitcoins has been constantly increasing, yet the price has been going steadily up as well. That's because they've become more trusted, more usable. More places will accept them in trade, and more exchanges exist. When places like Mt. Gox fail, or fear that foreign entities have the ability to essentially rob the banks with impunity, it makes the currency less trusted. Consider this. The government issues a currency called digibux. They are matched to the USD, you can buy one digibuck for 1 USD, but they are limited in volume, only so many are offered. Looking at this naively, digibux has the same value as USD. Now consider the following happens, the government takes down a giant drug operation, and invalidates all of the digibux that were involved in the operation. A friend of yours who was a pizza delivery guy has hundreds of dollars removed from his digital wallet because they were tips from people who had participated in the drug trade. Now you're sitting with 10,000 digibux, and you know that the government is pleased with the results of the previous sting and wants to set up more operations like that. Someone offers you 8,000 USD for your 10,000 digibux. You know that the 8,000 USD can never just vanish. The number of digibux in circulation went down. But did that make the total value of digibux go up?

tudorizer 13y ago

"Lost" is such a harsh word. They are still here, in the blockchain.

jackgavigan 13y ago

There have been hints that MtGox's losses were due exploitation of the transaction malleability issue. I don't know if it's possible to identify (from the blockchain) transactions that have been altered in a way that exploits the malleability issue but it should certainly be possible to identify pairs of transactions with identical startpoints, endpoints and sizes (i.e. number of bitcoins). If it turned out that pairs of such transactions turned out to come from MtGox's wallets to third-party wallets, that would probably be a good starting point.

colinbartlett 13y ago
I would be surprised if that was simply a ploy by Mt. Gox to deflect blame from their own ineptitude.

tjaerv 13y ago

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...

the_watcher 13y ago

Since the story seems to be that this has been going on for years without anyone investigating, I'd guess that most of them are long since laundered and distributed between various innocent bystanders. Even if we could trace every single uBTC to it's current location, the percentage actually held by those responsible has got to be very small.

uslic001 13y ago

Any truth to the claims made on this website? http://www.doctrackr.com/blog/bid/376566/409-Million-in-Bitcoin-Stolen-Who-is-to-Blame?utm_source=hacker-news&utm_medium=social&utm_term=post&utm_content=ddos-attacks&utm_campaign=Blog-Post-2-28 http://www.doctrackr.com/blog/bid/376566/409-Million-in-Bitc... "The Pony botnet attack was an ambitious data collection program. TrustWave reported staggering data loss statistics from the event the following sensitive information was stolen. 1,580,000 website login credentials 320,000 email account credentials 41,000 FTP account credentials 3,000 Remote Desktop credentials 3,000 Secure Shell account credentials Pony’s attack on the Bitcoin community took down the worlds largest Bitcoin exchange, and caused the price of Bitcoin to plummet. The attack reinforced security concerns over the currency. Can confidence in Bitcoin recover?"

corresation 13y ago

To reply to a recurring line of thought, Bitcoins are not atomic entities with serial numbers like dollar bills. You can't say "Bitcoin #AE472b was stolen" and then trace it through its life, or blacklist it. Instead Bitcoin is a ledger that details wallets and accounts. The origin of balances came from mining, and then people made transactions that, on the official ledger, transferred some or all of those amounts to other wallets. And on, and on, and on. Hypothetically, if the community were foolhardy enough to trust someone's list of "recipients of mislaid money" wallet ids, you could blacklist those wallets, or even, through group agreement, force transfers back. But that's where tumblers come in: Tumblers are group wallets that take transactions in from all sorts, and then distribute them anonymously to new wallets you control (after a service fee, of course). Anyone hiding their tracks will of course have used a tumbler, often anonymously run on the Tor network. Do you blacklist or reclaim from every wallet that took an output from a tumbler? Bitcoin would be toast. Tumblers are something that legitimate users of the currency make use of. You won't get the cooperation of tumbler operators because they are themselves engaged in a very serious crime. So the trace-ability claim repeatedly being made just doesn't hold when you have legitimate and illegitimate transactions by the millions all intermixed. When bitcoins are transferred...game over. Give up on that thought.

badman_ting 13y ago
Right, exactly. It just seems hopeless to try to figure out "where they are". They're drops of water in the ocean.
wpietri 13y ago
In this particular case, are tumblers viable? If I understand rightly, the stolen coins here are a significant percentage of the amount of bitcoins outstanding.
- corresation 13y ago
  Supposedly this looting went on for years, death by a thousand transfers. It will have dissolved into the sea by now.

brudgers 13y ago

I suspect that the bitcoins have been exchanged for something else and are back circulating around. The beauty of the heist is that any bitcoin in circulation invariably passes through transactions where the parties have a compelling interest in not being attached to the transaction. After finding a stolen bitcoin, unravelling its history back to the Mt. Gox Heist is likely to meet a wall of resistence - e.g. if it passed through Silk Road the parties on both sides will be reluctant to come forward and provide information. In terms of a tort, is it civil or criminal? Was the loss of the coins by Mt. Gox simply an unsatisfactory business transaction? Supposing there was a theft, how should the bitcoins be valued? By the amount of storage space they consume, by the cost of the resources required to create them? If by some market price, which one - some average at the time of their creation, at the time of their loss, at the time of their recovery, or at the time of the prosecution? Many of those values are zero. Finally, how many of Mt. Gox's customers are going to come forward and claim ownership if such claims are accompanied by a risk of being asked "And how came you to acquire these bitcoins?" Unlike fiat currency, no government has an interest in supporting the agreed upon fiction that bitcoins are not a fiction. Stealing cash is a crime because the government has an interest in cash being an asset. The problem with cryptocurrency is the proportion of black and grey market interests it attracts. With bitcoin, they were there first and good citizens second. Separating good citizens from their money was always going to be an attractive option, probably more attractive than separating participants in the black and grey markets from theirs given the greater potential for more serious reprisals which might accompany theft. It's been over since the first Bitcoin story on NPR.

nickmolnar2 13y ago

Wouldn't the sheer number of coins involved make tumbling services almost useless. What is the volume that a single tumbler gets per day? If you put in tens of thousands of coins, and there are only a few dozen coins in the Tumblr that day, your coins are going to be most of what comes back.

dragonwriter 13y ago
> Wouldn't the sheer number of coins involved make tumbling services almost useless. Sure, if they were all stolen and tumbled at once. The descriptions of a cold storage "leak" suggest that if the loss was due to theft, it was a gradual over an extended period.

zerocored 13y ago

Things like these are bound to fall. People should have predicted this risk.

ZeWaren 13y ago

What if Satoshi Nakamoto stole them?

rikacomet 13y ago

So what happens next? -The government has no inclination to interfere (even though many US citizens lost their money) as they were against it (if not outright criminalizing it). - The lost money, even if recovered in full, would not be the same. The time lost is money lost. Besides the emotional shock and pain people had to take. - Someone somewhere is sitting on that money, and it will have value, because people won't stop trading Bitcoin even now. I know people are not ready to take any criticism of bitcoin, but here it is, what needs to be fixed about it.

oskarth 13y ago

Here's what I would do if I stole 750k Bitcoins. 1. Split the wallet up into as many wallets as possible. Preferably by transferring them through a couple hundred compromised (but not emptied) accounts. 2. Sell each individual wallet of say, 100-1000 BTC, on the black market. Make sure the transaction happens outside the transaction chain (i.e. either in real life or using other wallets with some kind of alternative trust system). 3. Be prepared to lose 5-20% of the value, in exchange for turning the money "white". If the money was stolen and the people who took it aren't stupid, I don't see how someone is ever going to find it.

bdevine 13y ago
Of course, the more wallets you create and sell, the higher the probability that at least one of their buyers is stupid.

junto 13y ago

Whilst the numbers quoted in US dollar terms are quite staggering, I would be interested to know what the actual losses are based on the initial investment dollar amount. I'm guessing many of these coins were mined or bought before the astronomical price rises. Of course I understand that that is irrelevant to people who have perceived millions of USD, but interesting nevertheless.

danudey 13y ago
This is an interesting point. This value is all speculative until the it's resolved by conversion to another currency. The entirety of my LTC holdings are from mining coins, trading out to USD before it dropped, then 'buying' in again. I ended up with around five hundred bucks worth, mostly due to just smart trading, costing me nothing. The value has recently dropped, and I'm sad that I didn't cash out before, but I didn't actually lose anything. I'm still up the entire value of my portfolio, I'm just not up as much as I was before (and could have cashed out at). I do feel bad for the people who bought in and then lost it all.

elif 13y ago

Instead of a blacklist which is tantamount to centralized regulation, there can be a concerted effort by the community to publicly shame people using these coins, or tumblers, merchants, services, etc. which accept them.

gremlinsinc 13y ago

Wouldn't it be funny if the lost bitcoins---were all the result of someone forgetting where they put the key? So not stolen, just literally lost? Talk about a major 'oops' moment.

ryanSrich 13y ago

They are most likely being held by the U.S. Government. http://www.reddit.com/r/BitcoinMarkets/comments/1z2xo5/speculation_the_us_government_has_control_of_goxs/ http://www.reddit.com/r/BitcoinMarkets/comments/1z2xo5/specu...

bitcoinlive 13y ago

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