Japanese Police Arrest Mount Gox CEO Mark Karpeles 104
McGruber writes with the news as carried (paywalled) by the Wall Street Journal that Mark Karpeles, who headed bitcoin exchange Mt. Gox, has been arrested by Japanese police: In February 2014, Mount Gox filed for bankruptcy, saying it had lost 750,000 of its customers' bitcoins as well as 100,000 of its own, worth some $500 million at the time. A police spokesman said Mr. Karpelès is suspected of manipulating his own account at the company by making it appear that $1 million was added to it.
The BBC reports the arrest as well, and notes that the coins missing from Mt. Gox represent 7% of all Bitcoins in circulation.
No sweat, just act like a bankster. (Score:2, Interesting)
Nothing will happen to you - in fact, demand the government give back all that money they stole from you after you stole it.
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hey. it doesn't work that way.
i've looked and looked and 'mt gox' isn't on the corrupt payoff legal exception list like goldman sachs, et. al.
but since we don't really maintain any kind of functional oversight (for obvious reasons), guess we'll have
to....let you off with a warning?
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Their cops don't arrest your ass unless their prosecutor is pretty f_cking sure they can convict your ass.
Or if they're requested to arrest someone (eg by theUS)
Re:No sweat, just act like a bankster. (Score:4, Informative)
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In Japan, getting arrested is pretty much like getting convicted.
Wow, you're not wrong. According to Wikipedia there is a 99% conviction rate.
Found? (Score:4, Insightful)
The firm said it found the bitcoins - worth around $116m (£70m) - in an old digital wallet from 2011.
They just "found" it in an old wallet? Who would leave $116m to be just found? . The whole story seems to be fishy right from the start.
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Know how I know you don't know how Bitcoin wallets and wallet backups work?
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Re:Found? (Score:5, Informative)
Who would leave $116m to be just found?
Given the mass incompetence of how Gox was run, that's the least surprising thing. They had paper wallets scattered around the city that that only Mark knew the password to.
The fishy part has always been that the theft occurred from offline, "cold storage" wallets, and that they rarely/never reconciled the money they had on hand with the debts they owed to customers. The latter is just business 101 for a business that holds other peoples assets. For MtGox that should match 100% as Gox was an exchange, not a bank, and didn't loan out money. Even for a bank the assets have to match the liabilities, and they have to reconcile the books. Gox didn't do that, which is criminally negligent.
Re:Found? (Score:5, Funny)
Given the mass incompetence of how Gox was run, that's the least surprising thing. They had paper wallets scattered around the city that that only Mark knew the password to.
So, you're telling me that Magic the Gathering Online Exchange stored its assets by printing them on paper cards? I never saw that coming. I hope they were at least kept in protective sleeves!
Re:Found? (Score:5, Interesting)
> The fishy part has always been that the theft occurred from offline, "cold storage" wallets,
According to a Reddit AMA today from a former Mt. Gox employee (he had kept silent until the arrest, because his testimony was part of the investigation), there were no cold storage wallets. It was total amateur hour on Karpeles' part: no proper security, no proper accounting, customer funds used for business and personal expenses, etc. The likely situation is the "missing" bitcoins never actually existed. Customer accounts were credited with fake coins to cover the fact that their funds were being used for other things. Eventually customer demands for cash or sending out their bitcoins elsewhere could not be met, and they declared bankruptcy.
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So straight up Ponzi scheme?
Outcome as expected (Score:2)
If people didn't mangle the name there should be no surprise - it's "MT GOX" as in "Magic The Gathering Online eXchange" - a card trading site for fucks sake people.
Typos like the one in the summary ("mount" Gox) and people referring to it as Gox without knowing why are part of the confusion that led to a reputation the site did not deserve. Hobby level bitcoin stuff behaved as expected. "Mass incompetence" in only perceived by people that thought it was a ban
Re: Found? (Score:1)
Yeah. The connection between the Silk road & Magic the Gathering Online Exchange is a fishy one. At one point the defense team for (Ross Ulbrecht) argued that Mt. Gox CEO is the real Dread Pirate Roberts.
Its not easy to follow because the US Govt supressed a lot of info during the Silk Road trial. This Ars link begins to make sense of the connection http://arstechnica.com/tech-policy/2015/01/defense-bombshell-in-silk-road-trial-mt-gox-founder-set-up-ulbricht/
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If the wallet in question says "BAD MOTHERFUCKER" on it them coins is mine thank you.
"Mount Gox" (Score:2, Informative)
"Mount Gox"? Got to admit, I do tend to think of it like that, but it was (back in the day) an acronym for "Magic the Gathering, Online eXchange". Just MtGox.
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Good news! The word month doesn't appear in the title!
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Note to self (Score:4, Insightful)
Don't trust private currencies from hucksters such as these guys. Their business is based on pure FUD. Play it safe with the government of your choice, one that has its millions of citizens ready and willing to back it up.
Re:Note to self (Score:5, Insightful)
Re:Note to self (Score:5, Insightful)
It's so weird... I go to the bank, I get cash, I buy stuff. I use my credit card, I buy stuff. I send checks to pay bills. All with this worthless fiat currency that you rant about. Remind me, what's wrong here? The fact that what it can buy tomorrow may be different from what it can buy today? If you can point me to ANYTHING whose worth hasn't changed over time, I'd love to see it.
Re:Note to self (Score:5, Informative)
Gold/silver/etc are certainly traditional forms of money, because they were easily recognizeable in the ancient world as such. The problem with using them as such today is that you can't tailor the supply of money to the amount of production going on. Why do you need to do this? Well, because having it off by too much is bad. Imagine a village where there's 1000 pounds of gold in use as money. Someone comes back from an expedition, having found another 1000 pounds - and causes an immediate 50% inflation because you have 2x the money representing the same amount of production. The reverse is true as well, if production increases by 5% each year, but the amount of gold stays the same - except this time you get deflation, where gold is worth more (so people tend to hoard it to spend later, not now, which in a modern economy is very very bad).
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I don't see the sense in using a car as currency. Those things lose 20% of their value the moment you drive them off the lot.
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Of course, one has to be careful. A car that I bought for $12,000 in 1979 was just appraised at $484,000. Not quite a Fiat. Just a Cousin with eight more than the customary number of cylinders.
Definitely not a Fiat then... *grin*
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One thing that the Foamers against "Fiat" currency are so spectacularly uninformed about is that Fiat Currency has been in continuous circulation for ~2300 years in the West. Even Gold can't make that claim, since it was drawn out of general circulation during the Carolingian Era, and not re-introduced until some 500 years later. Silver, in various debased forms, took its place.
But even a Silver coin had a problem; it still had too high a value for daily trade.
The Romans introduced the Bronze As, from the
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Remind me, what's wrong here?
Government backed fiat currencies tend to be inflationary. Mild inflation of around 2% is actually beneficial for the overall economy, since it encourages people to spend or invest their money rather than sitting on it. But it means that fiat currencies are a poor store of value.
Crypto-currencies tend to be deflationary. That is terrible for the overall economy, but it makes them a good store of value. Plenty of people have made a lot of money by holding onto bitcoins, but they would make a poor basis f
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*In theory* Crypto-currencies tend to be deflationary. That is terrible for the overall economy, but it makes them a good store of value.
Fixed that for you.
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*In theory* Crypto-currencies tend to be deflationary.
Fixed that for you.
Crypto-currencies have been strongly deflationary in practice as well, so I don't know what point you are trying to make. In 2010, a bitcoin was worth $0.001. Today, a bitcoin is worth $280.
By design (Score:2)
If you have another example *in practice* please supply it.
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All with this worthless fiat currency that you rant about.
The Anonymous Coward you are replying to didn't say fiat currency was worthless. He said, "I would love to use currency issued by my government. I can't. I can only use fiat currency issued by the private corporation known as the Federal Reserve."
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It's probably good that the executive and legislative branches do not have direct control of monetary policy as it reduces the chances of fads from
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I conduct commerce with *real* United States currency: American Silver Eagles and American Gold Silver Eagles. they are the real basis point for the value of a $1 USD and $50 USD, not the $1 FRN and $50 FRN that are worth ~20x less.
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You're not using many $50 coins, since not that many were made (one small commemorative run), and the Eagle was $10, not $1.
If you are using them as you say, you're using them as a commodity, not as currency.
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"If you can point me to ANYTHING whose worth hasn't changed over time, I'd love to see it."
Trolling. Still just as valuable today.
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It's so weird... I go to the bank, I get cash, I buy stuff. I use my credit card, I buy stuff. I send checks to pay bills. All with this worthless fiat currency that you rant about. Remind me, what's wrong here? The fact that what it can buy tomorrow may be different from what it can buy today? If you can point me to ANYTHING whose worth hasn't changed over time, I'd love to see it.
No, no, the thing is if we still had the gold standard, then you could withdraw all your money in gold (when the nuclear/zombie apocalypse happens) and it would have absolute value in gold when you went to buy some food and ammunition because it's gold.
See? By definition, gold is gold, whereas fiat currency is just paper. You will always be able to use gold to, um, make jewellery and high quality electrical connectors and stuff.
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The idea is nice. The execution is a pure scam by just another startup [slashdot.org].. These people have been pegged, but the con still works. I saw it on the subway every day. There is no human endeavor, from atomic to galactic, that works as well as the shell game.
Re: Note to self (Score:3)
Yes, do that - please trade me your btc for fiat. Fiat has a fabulous long-term track record every time it's tried. Oh, I know - humans are so much smarter this time around!
So what's up with those bitcoins? (Score:2)
Considering there's some master file where all the movement of all bitcoin and fractions of it are stored, I wonder what's up with these bitcoin. It should be possible to trace these bitcoin: from the people that lost them, the wallet of MtGox can be traced. And then it can be traced whether they're still in that wallet.
And then? If a wallet is lost, the bitcoin is lost forever? No way to re-mine it or anything? Because this would be bad for the future of bitcoin. 7% disappeared with the demise of MtGox. A
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BitCoin is NOT anonymous. All it takes is a little detective work.
Bitcoins anonymous until you spend them ... (Score:2)
The biggest advantage of Bitcoin is that it's anonymous. The blockchain might identify which wallet had those bitcoins, but there is no way to know who actually controls that wallet.
Bitcoins are anonymous until the other party in the transaction (transfer) identifies you. One only needs the cooperation of the "seller" who accepted your coins to identify you, or the cooperation of the "buyer" who gave you coins, etc. For example you buy something with bitcoins and it gets delivered to you.
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The biggest advantage of Bitcoin is that it's anonymous. The blockchain might identify which wallet had those bitcoins, but there is no way to know who actually controls that wallet.
For me, the biggest advantage is actually that I can spend it anywhere. What I mean is that I don't have a 3rd party telling me that my sale has been declined because they don't like where my transaction is being routed through. With crypto-currency I can send direct to the person I want and no middle man, except the exchange I purchased it from, but that is less of a worry for me, because all I want is for my money to get where I want it to go.
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And then? If a wallet is lost, the bitcoin is lost forever? No way to re-mine it or anything? Because this would be bad for the future of bitcoin. 7% disappeared with the demise of MtGox. A large number got lost to some UK garbage belt. More will be lost to whatever causes. Over time there may be no bitcoin left!
Supply and demand, then the value of all other coins go up. Traditional currencies have inflation because they are printing money faster than old bills get destroyed. This causes the value of traditional currencies to go down over time. It's argued that some inflation is good as it encourages investment or spending (as opposed to keeping it under your mattress). Having a currency with deflation has never been really tested. At the least, some specter cannot decrease it's value by just creating more at
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Value can go up, but when the demand totally outstrips supply and it becomes hard to find bitcoin to make one's payment, good chance something else (without this lack of liquidity) steps in and whatever is left of bitcoin loses all value as it's not used any more. This assuming a digital currency will ever become a serious player, of course.
Re:So what's up with those bitcoins? (Score:4, Informative)
A single bit coin can be broken down into parts almost infinity (so you could pay someone 0.00003 bitcoin). It's limited now to something like 8 decimal places, but there's room in the spec to allow even more granularity than that. So while technically every bitcoin in the world could be lost, it's very unlikely.
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Traditional currencies have inflation because they are printing money faster than old bills get destroyed.
The amount of "printed currency" in circulation has almost nothing to do with the size of the money supply. It's amazing how many gold/bitcoin fans don't understand this. Heck, the US recently concluded "QE", in which a couple of trillion dollars were created by the Fed without any of it being physically printed.*
When you deposit $US with a US bank, in a savings account or CD, it can loan out 100% of your deposit. If banks offered BTC-denominated savings accounts, they'd work the same way. If you're thi
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Part of this is because inflation was a really big problem in the 70s and early 80s. The way monetary policy usually works is pretty easy. Growth usually corresponds to inflation. If there's too much inflation, raise interest rates. Growth starts to slow too much, cut interest rates. It's all about smoothing out the up/down (or boom/bust)
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Sure, all that's true, but most modern recessions aren't caused by lack of money supply, but instead lack of demand. If businesses don't see any worthwhile investment opportunities at any interest rate, additional supply won't help. You can't push on a rope. Stability (and its counterpart, uncertainty) is the chief concern for most recessions: when businesses and consumers reach the point where they believe they understand the "new normal", can cope with it, and have survived, only then do they start spe
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When you deposit $US with a US bank, in a savings account or CD, it can loan out 100% of your deposit. If banks offered BTC-denominated savings accounts, they'd work the same way. If you're thinking "but wait, that means there wouldn't be enough bitcoins in existence to allow everyone to withdraw their deposits", then congratulations, you understand how banking works.
The difference of course is with fiat currency the government/central bank can "print"* money on demand and lend it to the commercial banks so they can cover their customers withdrawals.
With BTC denominated accounts if everyone tries to withdraw their BTC at once the bank has a big problem. They can try to buy BTC to cover the withdrawals but there is no guarantee they will actually be able to.
* It starts out as entries in the central banks database but if the customers are demanding their money in cash the
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There's almost no difference between the two cases, and the difference is Federal deposit insurance which was enacted less than a century ago. Before that, all US banks were vulnerable to "runs on the bank", which would typically start if the bank appeared shaky. At that time, people would try to get their money out before the bank collapsed, and if enough did that the bank would be out of reserves and would go broke.
The FDIC and FSLIC aren't going to give you dollar bills to replace lost savings. The
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I don't know what would happen if everybody insisted on withdrawing their money in cash, but then I don't know what would happen if I were struck by lightning before and after winning the Powerball lottery, and that's more likely.
It's unlikely because people trust the banking system and people trust the banking system because the government steps in to prevent most bank failures and covers small depositers in the rare cases they do let a bank fail. The government is gauranteed to be able to sort out bank failures because they have the ability to create money by fiat*.
As you say in the old days of the gold system bank runs were common and bitcoins are far more volatile than gold. I maintain that anyone who gets involved in fractional
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If you're thinking "but wait, that means there wouldn't be enough bitcoins in existence to allow everyone to withdraw their deposits", then congratulations, you understand how banking works.
With BTC denominated accounts if everyone tries to withdraw their BTC at once the bank has a big problem. They can try to buy BTC to cover the withdrawals but there is no guarantee they will actually be able to.
Now you understand how banking works. That's now a flaw in the system, that is the system. A savings account is a sort share in the bank, it's not at all a bundle of money in the vault.
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And then? If a wallet is lost, the bitcoin is lost forever? No way to re-mine it or anything? Because this would be bad for the future of bitcoin. 7% disappeared with the demise of MtGox. A large number got lost to some UK garbage belt. More will be lost to whatever causes. Over time there may be no bitcoin left!
Supply and demand, then the value of all other coins go up.
Not necessarily. There is also a thing called "reputation". If bitcoin is too error prone for the average user, wallet lost, passphrase forgotten, malware stole wallet and passphrase, etc ... then bitcoin gets a bad reputation and the public at large decides not to use it. Then it largely becomes an instrument of speculation as it mostly is today, its price largely determined by the expectation of speculators. Note that today they are generally betting on much wider public adoption. If evidence arises stron
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"Japan's economy was caught in a deflationary spiral for the past 20 years. It started in 1989, when the Bank of Japan raised interest rates causing the asset bubble in housing to burst. During that decade, the economy grew less than 2% per year as businesses cut back on debt, spending and lost productivity with excess workers (Japan's culture discourages employee layoffs). The Japanese people are also savers, and when they saw the signs of reces
A wallet is a file that can be backed up (Score:3)
If a wallet is lost, the bitcoin is lost forever? No way to re-mine it or anything? Because this would be bad for the future of bitcoin. 7% disappeared with the demise of MtGox. A large number got lost to some UK garbage belt. More will be lost to whatever causes. Over time there may be no bitcoin left!
Well to be fair a wallet is a file that can be duplicated, backed up, like any other file; or photocopied if a paper wallet. It doesn't hold coins, it only holds encryption keys that grant access to coins.
And one does not have to rely on an exchange, its this reliance on an exchange that can introduce a major vulnerability. Now your coins are in someone else's wallet, a wallet you cannot backup. If you keep your coins in a wallet you create and backup you may be much safer. Assuming of course you have a
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And then? If a wallet is lost, the bitcoin is lost forever? No way to re-mine it or anything? Because this would be bad for the future of bitcoin. 7% disappeared with the demise of MtGox. A large number got lost to some UK garbage belt. More will be lost to whatever causes.
I've always thought that this was a fatal flaw in bitcoin...if (somehow) a major portion of bitcoins were truly lost irrecoverably, the effect on the bitcoin-based economy would be disastrous in several ways, wouldn't it?
It seems it would be a strong incentive for Bad Guys(r) to deliberately engineer some sort of event to "lose" a huge number of bitcoins, making sure, of course, that their coins weren't among the ones lost. Suddenly the value of the their (remaining) bitcoins would skyrocket, no?
But n
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bitcoins reside in "unspent outputs" in the blockchain. The unspent outputs are associated with an "address". An "address" is a cryptographic hash of a public key and the holder of the corresponding private key can spend the bitcoins.
A wallet is basically a collection of private keys for addresses (or sometimes just a generator seed for said keys). To an outside observer it is not visible whether two addresses are part of the same wallet or not. The only thing that distinguishes between a customer withdrawl
I'm ashamed that I never get sick of these stories (Score:1, Flamebait)
I take no small amount of delight that bitcoin zealots are painfully repeating the lessons that the rest of the world learned over several centuries; but this time compressed into a couple decades and punctuated by the laughter of everyone else.
I guess it turns out that there are some advantages to government backed [inflationary] currencies with strong banking regulations & government backed insurance on individual accounts. But yeah, no, please continue "sticking it to the establishment" with your 133
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I guess it turns out that there are some advantages to government backed [inflationary] currencies with strong banking regulations & government backed insurance on individual accounts.
Yes and no. Bitcoin could have that too, it's just far too new for anyone to have bothered. It won't be government backed, but neither is gold. Bitcoin is really just an easily exchangeable commodity like gold or silver. You don't exactly NEED a banking system to exchange it between persons easily. But if you have a l
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All currencies and even gold/silver/platinum only have value because people BELIEVE they have value.
No. Gold, platinum and sliver have actual uses that contribute to their value. While much of the value may be speculative, they do have intrinsic value which is specific to each of them individually.
Bitcoin has no similar intrinsic value that isn't easily copied (and possibly improved upon) by any number of altcoins.
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> Bitcoin has no similar intrinsic value that isn't easily copied (and possibly improved upon) by any number of altcoins.
What you are calling "intrinsic value" is more correctly "utility value", the value we put on things for their usefulness. However, it is not an intrinsic property of an object. A gallon of water in the desert when you are thirsty is worth much more than a gallon of water to take a shower at home, when you have it supplied by a water utility at low cost. Both gallons are useful, and
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I take it you have not created any wealth... No, you can do quite a bit of exchanging without the bank being involved. Rather than get into details, please accept that I have a safe in my home with plenty of money in it. I just recently ordered a BMW and paid that with cash. Now, obviously, there is a bank (and some credit unions and some investment houses) if I want a large sum of money. I have filled out the form (I forget the name, they make me sign one if I take out x-amount of dollars and I have been t
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there are some advantages to government backed [inflationary] currencies with strong banking regulations & government backed insurance on individual accounts.
That kind of insurance, guaranteeing that you will get at least a fraction of your money back when convenient for the bank, could be replicated for Bitcoin, but it would only be of value to lunatics
Everyone forgets there were two Mt. Gox scams (Score:3)
I lost around 200 bitcoins in the first "crash"; it was very early on. Not widely reported.
I hope this guy spends some time in the slammer.
Playing the Trump card (Score:2)
I lost around 200 bitcoins in the first "crash"; it was very early on. Not widely reported.
I hope this guy spends some time in the slammer.
People also forget that such things happen with more than just Bitcoins. I wonder how much was lost when "The Donald" had his crash, and then somehow lept back up as rich as before as if he had just moved other people's money into a secret account.
There are a lot of such crooks about.
Disregard that, I Mt Gox (Score:1)
Never mind the bloody bitcoins, those assholes still have 23 of my "Magic: The Gathering" cards from the "Cliches of Fantasy" series, including "Scantily clad female warrior with useless bikini armour that leaves her midriff exposed" and "Dwarf with massively oversized axe".
I bet Mark K already sold them for half their $34.50 value and spent it on a cocktail at some overpriced bar. Tosser.