12 ms·

I am borderline speechless in the face of the incomprehensible carelessness. The lack of records is amazing. The lack of accounting is amazing. The lack of prof

I am borderline speechless in the face of the incomprehensible carelessness. The lack of records is amazing. The lack of accounting is amazing. The lack of professional standards is amazing. The lack of common sense is amazing. If you'll excuse me, I have to go to the bank. I just realized that I left a million dollars in the pockets of the jeans that I just washed. I suppose I should dry them out and deposit them, along with the $100,000 I just found fallen between then cushions of my couch.

pushedx 13y ago
This seems like complete BS to me. I wonder how it's going to show up in the blockchain. I suspect Kerpeles has somehow shuffled a few 10,000 BTCs to a private account, considering the lack of records. I lost over $5000 USD (in fiat) on Mt. Gox and I want my money. Seeing stories like this just raise more questions that I wish didn't have to be asked.
- oznathan 13y ago
  Check the bitcoin reddit. Everybody knows about that 200k btc for weeks. There is evidence they have about 300k more.
  - nwh 13y ago
    Remember that Reddit is frequently completely wrong with it's guesswork, only a fool would rely on that communities information when preparing for a witch hunt.
    - sillysaurus3 13y ago
      For what it's worth (which isn't necessarily very much, since I've been very wrong about bitcoin before) I've been monitoring the situation pretty closely, and the Redditors have been doing a thorough and fairly scientific job of concluding what is or isn't possible. There are some crazies in the threads of course, but they get downvoted or called out on their speculation. Since there's no concrete evidence, what rises to the top of the threads are statements like "Here's what we know. Here are possible theories as to why these facts are present." It feels very much like the opposite of a witch hunt.
      - nwh 13y ago
        The "analysis" is frequently totally incorrect, I've looked at it before and I wasn't impressed. They mostly hinge on the assumption that if 1x sends to 1y then 1y is owned by 1x, which is obviously complete nonsense. Once you get past a single hop there's usually no way of knowing if the transaction is an internal move or one to an external party. Unless there is cryptographic evidence in chains of transactions that prove ownership, nobody can really claim Gox owns anything past what they have just announced.
        sillysaurus3 13y ago
        Someone transferring huge sums of money right before they shut down and claim the money is missing is pretty suspicious.
        nwh 13y ago
        Until otherwise proven, it's coincidence. Assuming just complicates things.
        oznathan 13y ago
        People "assumed" about that 200k wallet over a month ago. "Proven" is subjective and a rhetoric that has agenda on its own.
        nullc 13y ago
        Perhaps but the 200k in question was last transferred in 2011 (until they found it and moved it very recently). At least the reddit discussions I've been directed to have been very unscientific— more pseudo-scientific in that they dump a bunch of data and throw around some technical terms. Though there may be some selection bias since people are probably more likely to ask me for my opinion on the more questionable work.
        sillysaurus3 13y ago
        Ah. Thank you for correcting me. For what it's worth, your explanations are what I had in mind when talking about the scientificness of the investigations. I probably should have said "nullc has been doing a great job of making sure people don't get carried away with unfounded speculation" and left it at that though.
    - balladeer 13y ago
      Honestly, same goes for HN. It's just that it has more stricter laws once you are ghost-banned you would never know why. Basically both the communities are full of bs, HN does it with suave and accepted sophistication.
- thenmar 13y ago
  > $5000 USD (in fiat)
- teacup50 13y ago
  A question: given the financial risk, why did you trust Mt. Gox with your private keys?
  - pushedx 13y ago
    I began trading on Mt. Gox in mid 2011. Having most of my coins on there meant that I could make trades immediately based on market trends. I wasn't aware of all the negative reviews of Mt. Gox, because most of my "bitcoin experience" was visiting mtgox.com every few weeks. As soon as something clearly nefarious was going on, I was lucky enough to get 1.3 BTC out of my account in January. The remaining value of my account was $5000+ USD. I had sent in a photocopy of my passport last November, which they "processed" in February (already aware of the insolvency). This really pissed me off because I was finally "approved" to withdraw USD from my account but I didn't have the ability to do so on the website.
- alttab 13y ago
  This in itself is a crime. At the very least, it doesn't make them any less guilty, and moving around indescriminate amount of bitcoins where we do not know from whence they came to plug a huge financial hole in an insolvent company would raise a thousand eyebrows from those paying attention. Total novice. Clearly didn't talk to his lawyer first.
kayman 13y ago
my faith in someone else handling my wallet has diminished considerably.
- jadeddrag 13y ago
  That's probably not a bad thing. What gave you faith to begin with?
  - liveoneggs 13y ago
    "Hey! That's not the wallet inspector!" http://simpsons.wikia.com/wiki/Homer_Goes_to_College/Quotes http://simpsons.wikia.com/wiki/Homer_Goes_to_College/Quotes
- teacup50 13y ago
  Why on earth would you have faith in handing out your cryptocurrencies' private key? Is this just a symptom of the wrong-headed thinking around cloud SaaS, where data and continuity are considered to be of such low value that they can be entrusted to any number of external parties?
  - vertex-four 13y ago
    Because people have faith in handing out their money, which is much the same thing. The concept of a bank or exchange literally running away with your money is not a thing which happens to most people.
    - john_b 13y ago
      Except deposits are insured up to a cap that most people never exceed. MtGox offered nothing remotely comparable.
eschaton 13y ago
This is why there is regulation of the finance sector, and exactly what happens when companies and individuals try to pretend the regulation doesn't apply to them. If you want to start an online financial services business, the first thing to do is start researching the legal requirements for doing so, both where your business is located and where most of your likely customers will be. Not looking at them doesn't mean the rules don't apply, it's just grossly—potentially criminally—negligent. In fact, that's the case for anyone starting almost any business. You need to examine the legal and regulatory environment in which you'll be operating as the very first step of your due diligence. Anything else is negligent.
- Steko 13y ago
  A few weeks old but saw this earlier today via Brad DeLong: Who’d have thought that there might be an incentive for operators in a totally unregulated market to take people’s assets and run? Or that self-regulation would be so lacking in a market that purposefully concocts information asymmetries that benefit money creators/the tech-savvy…. or that the Bitcoin system was only recreating and replicating all the bad incentives we know and love in our current system, which are now being curbed by intensified post-crisis regulation? Irony of irony, Bitcoin Magazine concludes that since it is unfortunately the case that many bitcoin businesses must use escrow accounts to hold people’s bitcoin, the only solution to the problem is moving towards a quint-party agreement to manage unauthorised liability creation in the system... But you mustn’t confuse this with some sort of recommendation to forge a Federal Bitcoin Reserve system. It’s a “Five Parties Model” system. Entirely different... All in all, it would be NOTHING like the Federal Reserve System we have already arrived at thanks to decades of collective trial and error, and acquired wisdom from the countless bank collapses and system crises that have come before us. Except, of course it would be exactly like the Fed. And where it wasn’t yet exactly like the Fed, it would soon be, because exactly the same human processes, incentives and behaviours would govern its evolution and development. Proving the point yet again that there is nothing new under the sun, and that bitcoin is more of a replication of the old unregulated past, under a new technological order, which society collectively refined and regulated until it created the system-stabilising framework we know today, than a golden era of finance no-one had yet been smart enough to discover beforehand. ftalphaville.ft.com/2014/03/03/1787992/magic-the-undercapitalised-gathering-online/
maaku 13y ago
Million dollars? I think you're missing two zeros. I love it when I find $120MM under the couch. It really makes my day.
- thrillgore 13y ago
  I found 5 bucks in my car yesterday.
bananas 13y ago
Did we expect more? there's one hell of a difference between a large financial organisation or an exchange and some half arsed startup who hacked up a web site in PHP that just happens to handle something that represents a currency. The former at least probably has a QA team, knows industry regulations and best practices and designs their architecture properly. Oh and they have cumulative experience and a designated location you can visit with burning torches and pitchforks when they steal your money. I'm ignoring regulation as I've worked in the compliance industry and it's entirely about working around it. Not joking and I'm sure that this is going to stand on a few toes but some of the stuff I've seen on HN is verging on criminal. So many immature poorly thought out and damn right dangerous products being thrown out. Lots of people are sitting on ticking bombs like this.
- kiba 13y ago
  And yet you still see banking security that insists on alphanumeric password only and no 2FA. Seriously, that's screwed up. That being said, banks have insurance and all that jazz. So even though the state of security is not that great, it seems that you are less likely to get screwed incase of a screwup.
  - bananas 13y ago
    Not seen that in Europe for a long time. In fact all four UK bank accounts I have use two-factor auth.
    - vertex-four 13y ago
      My UK bank account (Bank of Scotland) does not have two-factor auth, and there's no stated plans to implement it, as far as I can tell.
      - bananas 13y ago
        My RBS and Natwest accounts both have CAP devices: http://en.wikipedia.org/wiki/Chip_Authentication_Program http://en.wikipedia.org/wiki/Chip_Authentication_Program Edit: apparently I don't need them any more. HSBC does still require it though.
jrockway 13y ago
Think about how much scalability they got from being "eventually consistent". It's only a matter of time before the other half-billion dollars shows up!
njharman 13y ago
Long established / regulated vs didn't exist a year ago / wild west.
nroach 13y ago
Another explanation is that such carelessness was a form of willful blindness. If Gox had cratered (relatively) silently then perhaps the coins would not have been 'found' until much of the fracas passed. But because legal process has been invoked (bankruptcy, IL class action) the penalties for not doing a clean-up now go beyond negligence and could result in contempt or a loss of liberty. So there's additional incentive to look harder at this stage.
TrevorJ 13y ago
It really highlights the current state of Bitcoin. The promise is having an all-digital method of transferring value peer to peer, without the need for banks, or other central authorities. The reality however, is that it's just not all that easy to cut out the middleman. People follow the path of least resistance, and educating yourself on cold storage and paper wallets and the like just isn't that easy compared to simply trusting a third party to do it all for you. Unfortunately, in doing so you give up all the benefits of bitcoin, AND all the benefits of traditional banking with it's oversight and FDIC coverage, etc. Literally the worst of both worlds.

pushedx 13y ago

This seems like complete BS to me. I wonder how it's going to show up in the blockchain. I suspect Kerpeles has somehow shuffled a few 10,000 BTCs to a private account, considering the lack of records. I lost over $5000 USD (in fiat) on Mt. Gox and I want my money. Seeing stories like this just raise more questions that I wish didn't have to be asked.

oznathan 13y ago
Check the bitcoin reddit. Everybody knows about that 200k btc for weeks. There is evidence they have about 300k more.
- nwh 13y ago
  Remember that Reddit is frequently completely wrong with it's guesswork, only a fool would rely on that communities information when preparing for a witch hunt.
  - sillysaurus3 13y ago
    For what it's worth (which isn't necessarily very much, since I've been very wrong about bitcoin before) I've been monitoring the situation pretty closely, and the Redditors have been doing a thorough and fairly scientific job of concluding what is or isn't possible. There are some crazies in the threads of course, but they get downvoted or called out on their speculation. Since there's no concrete evidence, what rises to the top of the threads are statements like "Here's what we know. Here are possible theories as to why these facts are present." It feels very much like the opposite of a witch hunt.
    - nwh 13y ago
      The "analysis" is frequently totally incorrect, I've looked at it before and I wasn't impressed. They mostly hinge on the assumption that if 1x sends to 1y then 1y is owned by 1x, which is obviously complete nonsense. Once you get past a single hop there's usually no way of knowing if the transaction is an internal move or one to an external party. Unless there is cryptographic evidence in chains of transactions that prove ownership, nobody can really claim Gox owns anything past what they have just announced.
      - sillysaurus3 13y ago
        Someone transferring huge sums of money right before they shut down and claim the money is missing is pretty suspicious.
        nwh 13y ago
        Until otherwise proven, it's coincidence. Assuming just complicates things.
        oznathan 13y ago
        People "assumed" about that 200k wallet over a month ago. "Proven" is subjective and a rhetoric that has agenda on its own.
        nullc 13y ago
        Perhaps but the 200k in question was last transferred in 2011 (until they found it and moved it very recently). At least the reddit discussions I've been directed to have been very unscientific— more pseudo-scientific in that they dump a bunch of data and throw around some technical terms. Though there may be some selection bias since people are probably more likely to ask me for my opinion on the more questionable work.
        sillysaurus3 13y ago
        Ah. Thank you for correcting me. For what it's worth, your explanations are what I had in mind when talking about the scientificness of the investigations. I probably should have said "nullc has been doing a great job of making sure people don't get carried away with unfounded speculation" and left it at that though.
  - balladeer 13y ago
    Honestly, same goes for HN. It's just that it has more stricter laws once you are ghost-banned you would never know why. Basically both the communities are full of bs, HN does it with suave and accepted sophistication.
thenmar 13y ago
> $5000 USD (in fiat)
teacup50 13y ago
A question: given the financial risk, why did you trust Mt. Gox with your private keys?
- pushedx 13y ago
  I began trading on Mt. Gox in mid 2011. Having most of my coins on there meant that I could make trades immediately based on market trends. I wasn't aware of all the negative reviews of Mt. Gox, because most of my "bitcoin experience" was visiting mtgox.com every few weeks. As soon as something clearly nefarious was going on, I was lucky enough to get 1.3 BTC out of my account in January. The remaining value of my account was $5000+ USD. I had sent in a photocopy of my passport last November, which they "processed" in February (already aware of the insolvency). This really pissed me off because I was finally "approved" to withdraw USD from my account but I didn't have the ability to do so on the website.
alttab 13y ago
This in itself is a crime. At the very least, it doesn't make them any less guilty, and moving around indescriminate amount of bitcoins where we do not know from whence they came to plug a huge financial hole in an insolvent company would raise a thousand eyebrows from those paying attention. Total novice. Clearly didn't talk to his lawyer first.

kayman 13y ago

my faith in someone else handling my wallet has diminished considerably.

jadeddrag 13y ago
That's probably not a bad thing. What gave you faith to begin with?
- liveoneggs 13y ago
  "Hey! That's not the wallet inspector!" http://simpsons.wikia.com/wiki/Homer_Goes_to_College/Quotes http://simpsons.wikia.com/wiki/Homer_Goes_to_College/Quotes
teacup50 13y ago
Why on earth would you have faith in handing out your cryptocurrencies' private key? Is this just a symptom of the wrong-headed thinking around cloud SaaS, where data and continuity are considered to be of such low value that they can be entrusted to any number of external parties?
- vertex-four 13y ago
  Because people have faith in handing out their money, which is much the same thing. The concept of a bank or exchange literally running away with your money is not a thing which happens to most people.
  - john_b 13y ago
    Except deposits are insured up to a cap that most people never exceed. MtGox offered nothing remotely comparable.

eschaton 13y ago

This is why there is regulation of the finance sector, and exactly what happens when companies and individuals try to pretend the regulation doesn't apply to them. If you want to start an online financial services business, the first thing to do is start researching the legal requirements for doing so, both where your business is located and where most of your likely customers will be. Not looking at them doesn't mean the rules don't apply, it's just grossly—potentially criminally—negligent. In fact, that's the case for anyone starting almost any business. You need to examine the legal and regulatory environment in which you'll be operating as the very first step of your due diligence. Anything else is negligent.

Steko 13y ago
A few weeks old but saw this earlier today via Brad DeLong: Who’d have thought that there might be an incentive for operators in a totally unregulated market to take people’s assets and run? Or that self-regulation would be so lacking in a market that purposefully concocts information asymmetries that benefit money creators/the tech-savvy…. or that the Bitcoin system was only recreating and replicating all the bad incentives we know and love in our current system, which are now being curbed by intensified post-crisis regulation? Irony of irony, Bitcoin Magazine concludes that since it is unfortunately the case that many bitcoin businesses must use escrow accounts to hold people’s bitcoin, the only solution to the problem is moving towards a quint-party agreement to manage unauthorised liability creation in the system... But you mustn’t confuse this with some sort of recommendation to forge a Federal Bitcoin Reserve system. It’s a “Five Parties Model” system. Entirely different... All in all, it would be NOTHING like the Federal Reserve System we have already arrived at thanks to decades of collective trial and error, and acquired wisdom from the countless bank collapses and system crises that have come before us. Except, of course it would be exactly like the Fed. And where it wasn’t yet exactly like the Fed, it would soon be, because exactly the same human processes, incentives and behaviours would govern its evolution and development. Proving the point yet again that there is nothing new under the sun, and that bitcoin is more of a replication of the old unregulated past, under a new technological order, which society collectively refined and regulated until it created the system-stabilising framework we know today, than a golden era of finance no-one had yet been smart enough to discover beforehand. ftalphaville.ft.com/2014/03/03/1787992/magic-the-undercapitalised-gathering-online/

maaku 13y ago

Million dollars? I think you're missing two zeros. I love it when I find $120MM under the couch. It really makes my day.

thrillgore 13y ago
I found 5 bucks in my car yesterday.

bananas 13y ago

Did we expect more? there's one hell of a difference between a large financial organisation or an exchange and some half arsed startup who hacked up a web site in PHP that just happens to handle something that represents a currency. The former at least probably has a QA team, knows industry regulations and best practices and designs their architecture properly. Oh and they have cumulative experience and a designated location you can visit with burning torches and pitchforks when they steal your money. I'm ignoring regulation as I've worked in the compliance industry and it's entirely about working around it. Not joking and I'm sure that this is going to stand on a few toes but some of the stuff I've seen on HN is verging on criminal. So many immature poorly thought out and damn right dangerous products being thrown out. Lots of people are sitting on ticking bombs like this.

kiba 13y ago
And yet you still see banking security that insists on alphanumeric password only and no 2FA. Seriously, that's screwed up. That being said, banks have insurance and all that jazz. So even though the state of security is not that great, it seems that you are less likely to get screwed incase of a screwup.
- bananas 13y ago
  Not seen that in Europe for a long time. In fact all four UK bank accounts I have use two-factor auth.
  - vertex-four 13y ago
    My UK bank account (Bank of Scotland) does not have two-factor auth, and there's no stated plans to implement it, as far as I can tell.
    - bananas 13y ago
      My RBS and Natwest accounts both have CAP devices: http://en.wikipedia.org/wiki/Chip_Authentication_Program http://en.wikipedia.org/wiki/Chip_Authentication_Program Edit: apparently I don't need them any more. HSBC does still require it though.

jrockway 13y ago

Think about how much scalability they got from being "eventually consistent". It's only a matter of time before the other half-billion dollars shows up!

njharman 13y ago

Long established / regulated vs didn't exist a year ago / wild west.

nroach 13y ago

Another explanation is that such carelessness was a form of willful blindness. If Gox had cratered (relatively) silently then perhaps the coins would not have been 'found' until much of the fracas passed. But because legal process has been invoked (bankruptcy, IL class action) the penalties for not doing a clean-up now go beyond negligence and could result in contempt or a loss of liberty. So there's additional incentive to look harder at this stage.

TrevorJ 13y ago

It really highlights the current state of Bitcoin. The promise is having an all-digital method of transferring value peer to peer, without the need for banks, or other central authorities. The reality however, is that it's just not all that easy to cut out the middleman. People follow the path of least resistance, and educating yourself on cold storage and paper wallets and the like just isn't that easy compared to simply trusting a third party to do it all for you. Unfortunately, in doing so you give up all the benefits of bitcoin, AND all the benefits of traditional banking with it's oversight and FDIC coverage, etc. Literally the worst of both worlds.