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Bitcoin Crime Japan The Almighty Buck

Sifting Mt. Gox's Logs Reveals Suspicious Trading Patterns 143

Posted by timothy
from the didn't-do-it-and-nobody-saw-me dept.
This analysis of trading logs from the Mt. Gox Bitcoin exchange analyzes a subset of the transactions that took place there prior to the exchange's collapse, and makes the case that two bots (the writer calls them "Willy," and "Markus") were making suspicious transactions which may have been used to intentionally manipulate the trading price, and which can explain the loss of Bitcoin inventory on which the exchange's failure was blamed. The author of the analysis says "[T]here is more than plenty of evidence to suspect that what happened at Mt. Gox may have been an inside job. What I hope to achieve by releasing this analysis into the wild is for the public to learn the truth behind what happened at Mt. Gox, how it affected the Bitcoin price, and hopefully for the individuals responsible for the massive fraud that occurred at Mt. Gox to be put to justice. Although the evidence shown in this report is far from conclusive, it can hopefully spur a more rigorous investigation into Mt. Gox’s accounting data, both by the public (using the leaked data) and the authorities (forensic investigation on the actual data)."
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Sifting Mt. Gox's Logs Reveals Suspicious Trading Patterns

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  • Hahahahhahaha (Score:5, Insightful)

    by Anonymous Coward on Sunday May 25, 2014 @10:41PM (#47090535)

    First we hear how BitCoin rules because it side steps those evil governments and their rules and regulations. Now that people have lost money due to dishonest behavior (which was 100% predictable given the nature of BitCoin) people are howling for the "individuals responsible for the massive fraud that occurred at Mt. Gox to be put to justice".

    HAHAHAHAHAHAHAHA

    What buffoons. First its "The government is evil! We rule because we are outside their jurisdiction". Then when the completely obvious consequence of having an unregulated and anonymous system for monetary transactions happens its "Hey, what the ???? Someone has stolen our money! Quick! Call the police! Government, come save us!".

    HAHAHAHAHAHAHAHAHA

  • by Anonymous Coward on Sunday May 25, 2014 @10:52PM (#47090577)

    No matter what the price is, a correctly operated exchange should pair buyers with sellers, and only perform the transactions when the buyers offer more than the sellers demand (exchange gets the difference). That's what it means to be an exchange: you facilitate trades. Some price manipulation shouldn't hurt them: it's just more trades and thus more profit.

    If you want to add some extra damping there and capture some profits from the changing prices, you can either screw with the profit margin size dynamically, or you can become a user of your own exchange (become an investor in multiple currencies, and shift between them on your own exchange). Investing like that is a separate thing, and if they mixed that up with the operating of the exchange part, then they really screwed up: if you botch separation on concerns, one screw up wrecks everything. Well, we know they really screwed up in lots of ways, and with no proper separation of concerns, they totally wrecked everything in lots of ways. No partial failure support + fail horribly at something = oops, no more company.

  • As time goes on... (Score:4, Insightful)

    by Rick in China (2934527) on Sunday May 25, 2014 @11:05PM (#47090619)
    The less people will care. The less people will remember their lost money, and the less people will be able to do about it. I think we're close to that point where those who lost have accepted it and those who followed the story stopped, no lessons learned, look at all the thriving bitcoin exchanges & online wallets. Like school shootings, we're about over it til the next big one hits.
  • by Anonymous Coward on Sunday May 25, 2014 @11:19PM (#47090661)

    There is more to it than just the currency. Without the infrastructure used to use and support it, it's useless.

    If there are issues with the infrastructure, websites, exchanges, etc. used to support it, then for all practical purposes there is a problem with the currency.

  • by Anonymous Coward on Monday May 26, 2014 @12:21AM (#47090807)

    It is a waste of computing resources. It duplicates systems that are already in place. The existing currency systems may have problems but is adding, perhaps several, largely uncontrolled currency systems to the mix, a benefit?

    If you want to use GPUs and electrical power, try folding at home.

  • Re:Easy to solve (Score:4, Insightful)

    by sfcat (872532) on Monday May 26, 2014 @01:44AM (#47090955)

    It wasn't foresight; same as for the EPA, labor laws, OSHA, ...

    Wow. For you Tea Baggists - oh, I'm sorry, "Libertarians" - it always comes back to the EPA and OSHA...

    He isn't saying there shouldn't be an EPA or OSHA, he's saying that people had problems then came up with the regulatory solution (ie creating the EPA). WTF are you responding to? I don't even think the GP is a tea partier.

    PS I'm a Democrat, not trusting the FED (which is a rational position if you know its history) isn't the same as being a Tea Party member. Its just one issue out of many and one that quiet a few Occupiers would agree with (well the ones that know what the FED is anyway). Now go troll elsewhere.

  • by perpenso (1613749) on Monday May 26, 2014 @02:26AM (#47091013)

    BitCoin is not "money".

    Even if true, bitcoin would still be a very useful payment system. It may not replace the US Dollar but it may very well replace PayPal.

  • Re:Hahahahhahaha (Score:5, Insightful)

    by WhiteZook (3647835) on Monday May 26, 2014 @03:04AM (#47091081)
    You are making a common mistake of claiming that a diverse group of people all have exactly the same opinion and motives. But in reality, the bitcoin supporters are all different people with different opinions. Some may be completely opposed to rules and regulations, while others are not. At any time, you only hear the most vocal and opinionated members of the group express themselves.
  • Re:Hahahahhahaha (Score:4, Insightful)

    by Anonymous Coward on Monday May 26, 2014 @03:14AM (#47091099)

    What buffoons. First its "The government is evil! We rule because we are outside their jurisdiction". Then when the completely obvious consequence of having an unregulated and anonymous system for monetary transactions happens its "Hey, what the ???? Someone has stolen our money! Quick! Call the police! Government, come save us!".

    Don't mistake hypocrites for bufoons. The "small government" people have always been about "small government" for you, "big government for me". Even most of the strictest "libertarians" want a strong police and army. Why? Becuase they believe (mostly against the evidence) that in future they will be rich and have lots of property that they would like someone else to support. Look at the way the Ayn Rand article on Wikipedia [wikipedia.org] says "[..] despite her initial objections, was persuaded to allow Evva Pryor, a consultant from her attorney's office, to sign her up for Social Security and Medicare." as if someone just signed a paper with her name and tries to avoid mentionaing that she actually happily took medical treatment... No; she got pain relief and medical treatment solely because the "big government" made sure she could. She benefitted from the social security payments of many people who died quickly and in accidents in a way that the money she would have saved from not paying social secruity could never have helped her and she still wasn't willing to be greatful.

    "Those Bitcoin people you are talking about are clear; they want the police to protect them; they want you to pay for it whilst they complain about too high taxes. This is not buffoonery, this is theft.

  • by Rich0 (548339) on Monday May 26, 2014 @03:48AM (#47091165) Homepage

    Exchanges should not lose inventory!

    Exchanges should not have inventory to lose!

    Those who lost money from Mt. Gox were treating it as a bank, not as an exchange. It is a lot easier to mess up the operation of a bank, or to be burned by a bank failure. That is why the FDIC was created in the US, and I imagine that most countries have similar sorts of arrangements. If somebody was storing any significant amount of money at Mt. Gox then perhaps they've learned something.

    Storing your bitcoins in an unregulated bitcoin-based bank is no different than storing your US dollars in an unregulated dollar-based bank.

    I agree with everything you said though - exchanges shouldn't have money at risk at all if operated properly, concerns should be separated, and even if something was messed up the exchange concern should never have more money on-hand than the momentary trading volume.

  • by perpenso (1613749) on Monday May 26, 2014 @04:20AM (#47091213)

    That process is irrelevant towards defining BitCoin as money. By the very definition of what money is and what money is used for - BTC qualifies.

    It fails by your very own definition, specifically the stable measure of wealth (alternatively described as a store of value) requirement. Its currently too volatile. The process is just one convenient and easily understood piece of evidence of this.

    Bitcoin's current value is that as a payment method not a currency. It currently threatens things like PayPal, not currencies like the US Dollar, Euro, etc.

    To some, bitcoin also has value as a speculative asset.

  • by NicBenjamin (2124018) on Monday May 26, 2014 @04:39AM (#47091263)

    I think the US government is genuinely confused. They aren't sure if these guys are more like Wall-Streeters that committed fraud on a massive scale thereby enriching themselves with billions, or common thugs who rob banks with guns. If it's the former, they're safe: too big to jail and one of the boys. If it's the latter, well, here comes pound-me-in-the-ass prison for life.

    If only they would have made it simpler by either stealing a lot more, or a lot less.

    The problem with this argument is there's no evidence that Mt. Gox actually stole the money itself.

    There's evidence a bunch of BTC advocates with excessively high IQs (and the corresponding total lack of common sense) are extremely convinced Karpeles stole the money, and have figured out how he could do it. But anyone who pisses off a bunch of high IQ people is gonna quickly be informed that they clearly are the reincarnation of Hitler and Stalin, as proven in this extremely convincing 47-page manifesto, which can only be understood by people eligible for Mensa membership. So the fact that BTC guys think they have evidence he stole the money is not terribly convincing.

    What is convincing is the fact we know where Karpeles is, and he's in bankruptcy. The bankruptcy Judge will have a good idea of Karpeles financial situation, which means that if he's spending like a millionaire and claiming his company has no money he's going to jail in Japan. Which in turn means if he stole hundreds of millions he'd have fled someplace under an assumed name.

    What's more convincing is his story. "programmers with no experience in security, totally fucked up the security," is a significantly more believable scenario then "programmers with no experience in security, and no history of fraud, purposefully designed a security flaw into our system specifically so they could exploit it." The fact he found a hundred million or so in BTC under his couch further increases the first story's credibility, because if you're good at security you don't do that shit.

  • by sphealey (2855) on Monday May 26, 2014 @11:18AM (#47092873)

    There is no question that the financial structure of the United States, and mostly likely the world as a result, was in danger in the 2008 time frame. President Bush and Secretary Poulson took the responsible course of action, deflected those whose advice was to let it all burn on principle, put together a bailout plan, invited the presidential candidates to review it, and got it signed into law. IMHO the only competent thing that W did during his entire Presidency.

    What President Obama can be held responsible for is not following up TARP with detailed investigations into violations of civil and criminal law, including prosecutions where appropriate. Particularly investigations into the utterly illegal shadow mortgage documentation "registry" that the financial industry apparently created around 2000. This was the first major financial crisis in the history of the United States that did not generate a strong investigatory response. There are undoubtedly reasons why that didn't happen, reasons noble, neutral, and craven, but the lack of _any_ investigation or prosecution is an utter failure of President Obama and his Administration.

    sPh

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