Chinese Bitcoin Exchange Vanishes, Taking £2.5m of Coins With It 346
An anonymous reader writes "A Chinese Bitcoin exchange has vanished without trace, taking more than $4 million of the virtual currency with it and leaving profit-hungry investors out of pocket. GBL, the Chinese Bitcoin exchange was launched in May 2013 and putatively based in Hong Kong, despite its servers being registered in Beijing. However GBL's Hong Kong offices do not exist. GBL mysteriously disappeared in early November taking an estimated $4.1m (£2.6m) of Bitcoins with it." (Beware the auto-playing ads, with sound.)
Sad Trombone? (Score:5, Funny)
Yes. Sad Trombone.
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Best. FP. Ever. Very well played.
Recurring theme? (Score:5, Funny)
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Re:Recurring theme? (Score:5, Insightful)
Re:Recurring theme? (Score:4, Insightful)
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The really stupid thing is that such an "exchange" does not offer "sketchy investments". The "sketchy investment" is the actual Bitcoin. I've seen no sites offer actual interest or anything: they just offer to keep your Bitcoins. And that's profoundly stupid since a Bitcoin wallet is just a private key, all the rest is the public bitcoin chain. There is no point in keeping your wallet anywhere but on your own computer. Or on external storage media. I don't get people who use web services to keep a Bit
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Fraud is nothing new. How different is this from a fly-by-night operation that takes orders and disappears with your cash?
Re:Recurring theme? (Score:5, Insightful)
Oh, ooh, I know this one! The difference is that a fly-by-night website will be taking credit card orders, and you can get a chargeback through your credit card bank when they don't show up with the merchandise.
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Not exactly. A lot of those only accept orders via western union or other similar methods.
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Because the rubes in this case should have been aware of the risks, getting involved in an untraceable currency. It's practically designed for illegal activity, so the news here is fly-by-night should be assumed to be the default.
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It's not untraceable. Why are detractors so uninformed? After 4 years you have still failed to learn anything about it.
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It's functionally untraceable, or at least trivial of launder, because the envelope only includes encrypted information about previous owners.
Re:Recurring theme? (Score:5, Interesting)
Indeed. It's about as far from untracable as you can get - you can trace every bitcoin back through every transaction it has ever been involved in to the moment of its creation - try to do *that* with cash. In fact except for the minor fact that you don't have to attach your name to an account it's a surveillance currency buff's wet dream.
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Kind of depends what you're trying to trace. When people talk about traceable financial transactions they're generally interested in identifying the people involved in the transaction not the individual monetary units.
eg the police could give a @!#% that the $100 bill with serial number 12345 was used to buy drugs. What they want to know is that Bill bought $100 worth of drugs.
In that sense bitcoin is good for untraceable financial transactions since (as far as I understand such things) the best we can de
Re:Recurring theme? (Score:4, Interesting)
It's the early days. The early days of banking had similar problems as well.
A bigger issue though is a LOT of exchanges want a LOT of personal information in order to do the exchange.
The real risk is not one of these exchanges disappearing, but getting broken in - tons of them ask so much personal information that you're at a real risk of identity theft or having your bank account drained.
The others, well, can seem sketchy at times.
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So what I don't get is why people would keep their bitcoins in one of these "banks" at all. Are they paying decent interest rates comensurate with the risk of trusting an unknown entity with your money? I don't see how they could be adding any actual security - if someone can steal my wallet credentials from my personal computer they can just as easily steal my "bank account" credentials.
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| So what I don't get is why people would keep their bitcoins in one of these "banks" at all.
So they can trade bitcoins frequently.
Re:Recurring theme? (Score:5, Informative)
Banks are insured.
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Not illegal banks!
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So the US/UK bank bailouts never happened right?
In the US at least, who do you think insures the banks? "An independent agency of the federal government, the FDIC [fdic.gov] was created in 1933 ..."
No FDIC doesn't insure banks (Score:4, Insightful)
Congress & the Treasury Secretary insures banks, but only if you're part of the in crowd like Goldman Sachs, and JP Morgan, and not Bear Stearns/Lehman Bros or thousands of less cool banks. And you don't even have to pay large premiums upfront---dinners, jobs and lobbying is so much cheaper than premiums.
The commissioner of the FDIC during the crisis was pretty strenuously against insuring banks and look what it got her.
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FDIC insures bank's depositors against malefesance by the bank.
You mean something like "A Chinese Bitcoin exchange has vanished without trace, taking more than $4 million of the virtual currency with it ..."
No (Score:4, Informative)
Re:Recurring theme? (Score:5, Insightful)
Re:Recurring theme? (Score:4, Insightful)
Oh the naivety.
Perhaps you've heard of Barclays, USB, or Goldman Sachs.
Re:Recurring theme? (Score:5, Insightful)
You haven't read much news lately, have you?
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All bankers are robbers. The only difference between the two is scale.
Give a man a gun and he can rob a bank , Give a man a bank and he can rob the world . . .
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assuming you either have a buyer or a place willing to take them
If you have that, then you have money. That's the definition of "money".
bitcoins "value" fluctuates.
Another normal feature of money.
bitcoin exchanges aren't banks
Depends on your definition of 'bank'.
For some it qualifies, for others it doesn't. It's certainly not anywhere near as well regulated or reliable as a typical first world bank... but it may not be far off from local banks 200 years ago, or banks in other less well regulated countries
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Sadly no, people seem to cling to bitcoins no matter how many times this happens. The kind of people drawn to anonymous decentralized currencies aren't the kind that are going to be deterred by measurable financial risk.
Re:Recurring theme? (Score:5, Interesting)
The kind of people drawn to anonymous decentralized currencies aren't the kind that are going to be deterred by measurable financial risk.
The kind of people who use an anonymous decentralized currency as an investment (and leave their investment sitting in the exchange) are not the typical users of bitcoins. Once you have BTC, why not transfer that directly to your wallet? Why keep it in the uninsured exchange at all?
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Even doey eyed idealists like convenience.
I don't see a problem.. Follow the... (Score:5, Funny)
Why not just follow the bitcoin trail? Perhaps call the local authorities and ask them for help?
>.>
Actually, I do feel sorry... Just had to say it.
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Who can you trust now? (Score:5, Informative)
Another exchange bites the dust, millions lost!
BitCoin has some *serious* problems, mostly caused by not being officially sanctioned currency that is regulated... But then, that's it's strong point too. But, being a pirate has it's down days. So, if you sleep with dogs, you wake up with fleas (or in this case, w/o your BitCoin. ..
Oh the humanity... Yawn.
Re:Who can you trust now? (Score:5, Insightful)
Indeed. Pick your poison.
If you want a decentralized, unregulated currency, then you don't get a FDIC promise when your bank vanishes overnight.
I understand why some currency is transitory on these sites, but why are people using online wallets beyond coins in motion (escrow or pending transaction, etc.)?
Re:Who can you trust now? (Score:5, Funny)
It's like my grandpa used to say: "Kid,if you want security, go with U.S. government savings bonds. If you want pussy and meth on the Silk Road, go with Bitcoin." This also explains why my inheritance was mostly in Bitcoins.
incorrect. pussy sold in $, or roses (Score:3)
Grandpa was incorrect. If you wish to purchase pussy, $20 bills are the preferred form of payment. Though, I did notice some backpage ads listing 290 roses / hour.
Re:Who can you trust now? (Score:4)
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Do you really need to ask why people are behaving foolishly? Most people just don't think about security.
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Bitcoin is like a little gold coin that you can magically transpose over the internet. If it's in your hands, it's as safe as any other valuable you own, with the perk that you can readily transact with it over the intertubes. However like any other valuable, if you send it halfway across the world to a complete stranger for safekeeping, then you're going to have a bad time.
Distributed security HEIST? (Score:5, Interesting)
Bitcoin was advertized as the virtual currency NOT stored in one place with NO detrimental reliances upon any ONE server, person or gov't. WTF?
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You need to use exchanges to trade the bitcoins for real money, and these represent a handful of large points of failure.
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Bitcoin was advertized as the virtual currency NOT stored in one place with NO detrimental reliances upon any ONE server, person or gov't. WTF?
I don't know about this exchange, but there are a few Bitcoin management services, where they keep the wallet for you and you don't have to worry about running bitcoin yourself.
It's almost exactly like how a bank will hold cash for you, except these banks are typically uninsured.
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Bitcoin management services, where they keep the wallet for you and you don't have to worry about running bitcoin yourself.
And people fall for this? Well, if you are speculating in BitCoin you are into high risk or a sucker... PT Barnum was right.
Hey, anybody out there who doesn't like holding your own BitCoin wallet, I'll take care of that for you. Just let me hold *your* money...
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We gave more blood, sweat and tears in exchange for more worthless paper money (if at all). So what's the difference between "real money" and bitcoin again? In the realness department, that is?
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It has no inherent dependencies of the types you describe, but there's no barrier to people adding them in because they simply don't understand what was supposed to be so advantageous about it in the first place.
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didn't really think it was wise to stuff all their money in their mattresses â" even virtual, cryptographic mattresses
So they elected to use a shady HK exchange instead?
I think you're a bit too generous with your use of the word "wise" :)
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I have never heard anyone mention instantaneous Bitcoin transactions except for people deriding the supposed claims. I've even had a few people try to deride my own posts on the subject despite the fact that I am fully aware of the inherent delays in the system and never made *any* claims to the contrary. If you've actually seen such claims on the BC forums etc. then I can only assume that either the people actually dealing with bitcoin are prone to extended blackouts after financial transactions, or are
Beware (Score:3)
Autoplaying ads with sound? No thanks, the summary will have to do.
This disappearing-with-all-the-funds is becoming SOP for exchanges.
BitCoins aren't incompatible w/ reg. but... (Score:3)
BitCoins are not incompatible with a normal regulatory and law enforcement apparatus that might prevent some of this. That said, due to their extreme utility for money laundering, tax avoidance, etc. I'm pretty sure they'd rather the things disappear and therefore may direct law-enforcement resources elsewhere in the case of a BitCoin theft.
Here, random stranger, hold my wallet for me (Score:5, Informative)
What idiot stores their cash in somebody else's wallet with no guarantee of that somebody's legitimacy and no insurance? Maybe these morons will have finally learned their lesson, and will keep their cash in their own wallets in their own pockets.
Re:Here, random stranger, hold my wallet for me (Score:4, Insightful)
Current Market Capitalization (Score:5, Informative)
For those curious, there are currently 12 million bitcoin in existence, with a net value of about $4.3 billion.
Source: http://coinmarketcap.com/ [coinmarketcap.com]
Re:Current Market Capitalization (Score:5, Funny)
For those not curious, here's a video of cats knocking shit over [aol.com].
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[aol.com] Sounds like a phishing scam.
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For many years they did give away promotional bird scarers and tea coasters, but I don't think they ever branched out to fishing equipment.
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Why we need regulations (Score:5, Insightful)
It's the 1% who spoil it for the rest of the honest people.
And actually, it goes deeper than that. A capitlaist system requires trust. Rules and regulations build trust into the system. Without these rules and regulations you don't have capitalism, you have a Wild West financial system that no one would invest a dime in except suckers.
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A "Wild West financial system" might be okay - in the Wild West. If somebody cheated you, you could track him down and shoot him. That doesn't work so well when the person cheating you is somewhere in Russia/China/Nigeria.
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Sorry, sometimes it's hard to tell...
look at the BIG Picture (Score:2)
bitcoin not like the real world (Score:3)
In a real market, no matter how dysfunctional, people want to make money - so stuff like this causes the value of whatever is being traded to go down.
But the biggest bitcoin enthusiasts are just a little religious, so they'll go frantically buying bitcoins to raise the value to prove this isn't really a big deal.
Almost like it's all a scam trying to pretend that TANSTAAFL doesn't apply and that you can really generate wealth with only speculation and no production.
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The purpose - the very designed-in function - of Bitcoin is not to create wealth but to be an ephemeral unit of transaction, which is why investors get eaten alive but also why it's not a flaw. It's like the difference between investing in US treasury bonds and investing in big piles of ones.
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What is an ephemeral unit of transaction? Apart from one that has a habit of going missing.
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You're supposed to buy it, use it as payment, and never think about that particular bitcoin again. Not hoard them like Scrooge McDuck in the mistaken belief that they're a thriving growth industry as almost every Bitcoin user seems to want to do.
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So, like a prepaid single usage Visa/Mastercard number? Or cash in an envelope?
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That's what I'm trying to convey, yes. (Whether that's an accurate picture, well...) You can see from this analogy why buying thousands of dollars worth of those and giving them to some random organisation in China might not be the savviest business move, while having one or two around for when you need them might be useful.
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No, I think a few major players can. $4 billion isn't a lot of money.
Eve Online (Score:3)
All the ISK scams that went on in EVE Online are now here in "real" world Bitcoins. In fact, you can probably predict the next scandal from what dirty deeds were done before.
But it it just me wondering if those involved think the punishment in the real world will be the same (none) ? I can imagine people being a little bit more upset after losing millions in real cash as opposed to losing some in-game fantasy currency.
History Presages Regulation (Score:3)
It was not that long ago that banks generally were subject to little or no regulation. Banks would fail, investors would lose all, only for the process to repeat itself again, and again. Eventually, in an effort to protect their economies, governments stepped to limit the risks that banks could take with their investors' money and, often, to insure the investors against loss, thereby engendering confidence.
Bitcoin has made its stock in trade the fact that it is unregulated by anything but a few algorithms. Like Adam Smith'e "invisible hand", we are to trust to these algorithms to provide a certain Deus ex Machina for providing security.
The reality is that until Bitcoin exchanges are regulated by credible authorities, security will be a fantasm.
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The algorithms provide quite a bit of security. It's not Bitcoin's security that is an issue, it's websites, people's computers, and people's trust. In this case, it was the latter. People trusted a 3rd party with their Bitcoin, and that 3rd party proved that trust to be mis
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Non Banking Entity (Score:5, Insightful)
Now there's a surprise (Score:4, Insightful)
I'm shocked, *SHOCKED* to find criminal activity happening in this unregulated currency exchange!
What the hell did you expect? (Score:2)
It's unregulated and anonymous- a perfect set-up to steal with impunity. Why would a sane/intelligent person have anything to do with bitcoin?
Not the main Chinese exchange (Score:3)
I've never heard of GBL.
The big Chinese exchange is BTC China.
Normal behavior for Bitcoin exchanges (Score:5, Insightful)
"Take the money and disappear" is normal behavior for Bitcoin exchanges. Sometimes they just disappear, sometimes they get broken into and robbed, and sometimes you're not sure whether the robbery was an inside job.
The list of failed Bitcoin exchanges is long. Bitcash.cz just closed yesterday. There's an academic paper with a list. [fc13.ifca.ai] 18 of the 40 exchanges on the list had failed. But that was last January. Since then, Bitfloor and Bitme shut down, and Intersango and Mt. Gox stopped paying out customer funds on demand.
Not one Bitcoin exchange is a bank or a registered broker/dealer in its home jurisdiction. That's part of the problem.
This is why anarchy sucks. What anarchy looks like is Somalia, not L. Neil Smith fiction.
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Since I'm entertaining myself with conspiracy theories today, here's one I just completely made up: what if government funds illicit operations by just changing a figure in a bank database to give itself more money to spend? Like QE (i.e. that money-printing thing everyone hates), but only for itself, and on a smaller scale.
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Then I doubt the US government would be in billions/trillions/whatever of debt.. they already have more than enough money from taxes - they just use it poorly.
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This has been tried before. IIRC debasement of money goes back at least to 1,000 B.C.E. Few have pulled it off successfully.
This creates money which if in excess for demand of money causes inflation. There is a casual link between demand for money and GNP.
The second reason is that the international bond market fears it will be paid with worthless currency in the future. The country’s currency is devalued. Interest rates on new debt go up. Bondholders demand payment is a sound currency. Etc.
Generally
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...your chicks for free.
I really don't get all you people who think a currency based on internet vapors is worth a bucket of warm spit.
Swap "internet vapors" with "vague promises by lying bureaucrats" and you've aptly described the US Dollar.
Re:Money for nuthin'... (Score:5, Informative)
My dollar isn't just backed by lying bureaucrats. It's backed up by people with guns--big guns. And don't you forget it!
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Swap "internet vapors" with "vague promises by lying bureaucrats" and you've aptly described the US Dollar.
And yet billions of people successfully use the US Dollar every day to complete transactions, and it remains the world's most popular and useful currency. Inexplicable!
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Swap "internet vapors" with "vague promises by lying bureaucrats" and you've aptly described the US Dollar.
And yet billions of people successfully use the US Dollar every day to complete transactions, and it remains the world's most popular and useful currency. Inexplicable!
You can thank the largest military force the world has ever seen (and the handful of powerful oligarchs who use said military to maintain global monopolies on banking and oil sales) for that.
So, less inexplicable, and more despicable.
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Re:Don't worry guys (Score:4, Informative)
Re:Don't worry guys (Score:5, Insightful)
Wasnt the whole point that people wanted an unregulated currency with no government involvement?
Whats that old saying? "Be careful what you wish for."
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I use bitcoin rather frequently and I've never run into this kind of problem.
Of course, I also always keep my bitcoins in my own wallet and don't leave them sitting in random escrow pools. There is only one place I've done business with using bitcoins that has run off like this, however at the time they left I had zero in my account, and I never had amounts larger than a few mBTC for any period longer than a day either (just long enough to complete whatever transaction I was about to do) and once I was fini
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1. A regulated currency does not protect from theft.
2. You are implying that because of Free-Market ideas or rules and regulations, we as a society should not follow and punish theft. This idea is so false I really hope I don't have to underline the obvious, or do i?
The customer should be free and invest
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Wasnt the whole point that people wanted an unregulated currency with no government involvement?
Bitcoin has many points (see bitcoin.org [bitcoin.org]) and this was never one of them. One of the many purposes of bitcoin is to have currency without central authority which could cause monetary inflation at will, but that in no way means that bitcoin should stay completely outside of any government influence and bitcoins thefts should be ignored by law enforcement.
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They also routinely give you things "for free" like roads, healthcare, and a legal system. What's your point?
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His point is that he has a marginally different impression of the role of government than what appears to be the default in his country, therefor every act of that government is clearly tyranny.
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I'm over 40 so it's real estate.... just not in the U.S.