Fraud, Not Hackers, Took Most of Mt. Gox's Missing Bitcoins 108
itwbennett writes Nearly all of the roughly $370 million in bitcoin that disappeared in the February 2014 collapse of Mt. Gox probably vanished due to fraudulent transactions, with only 1 percent taken by yet-to-be-identified hackers, according to a report in Japan's Yomiuri Shimbun newspaper, citing sources close to a Tokyo police probe. The disclosure follows months of investigations by police and others into the tangled mess surrounding the disappearance of the 650,000 bit coins.
Bitcoin != Coins (Score:1, Interesting)
$370 million is subjective. 650,000 inherently worthless pieces of information went missing. Nobody should have lost any money unless you were dumb enough to buy Bitcoins.
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Is that you, Mike?
Re:Bitcoin != Coins (Score:5, Insightful)
What do you think those funny little rectangles of material we all carry around with us all the time to exchange for goods and services are inherently worth?
There's nothing subjective about the fact that you could, as some particular time not specified by the summary, exchange those 650,000 bitcoins (not "bit coins" as the summary would have it) for $370m.
Nobody should have lost any money unless you were dumb enough to buy Bitcoins.
Yeah, yeah, we're all bitter about not getting in on the ground floor too. Let it go.
Re:Bitcoin != Coins (Score:5, Insightful)
Yeah, yeah, we're all bitter about not getting in on the ground floor too. Let it go.
The most common comment on stock trading forums discussing speculative stocks. And bitcoin has so far behaved very similar to speculative and gamed stock trading.
Re:Bitcoin != Coins (Score:4, Insightful)
Yeah, yeah, we're all bitter about not getting in on the ground floor too. Let it go.
The most common comment on stock trading forums discussing speculative stocks. And bitcoin has so far behaved very similar to speculative and gamed stock trading.
Wish I could mod the parent up. Exactly right.
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It's been pretty steady for a while now
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What do you think those funny little rectangles of material we all carry around with us all the time to exchange for goods and services are inherently worth?
They are worth the face value because they ARE money. If I had gold in my pocket you may feel its wroth more however its useless if nobody want it and people stop caring about its rarity and scientific values. Cash IS money because my government has decreed it to be so. Unless you are a libertarian that you should realise what the government says goes, we are not savage beasts living in the wild trading sticks are rocks for goods and services.
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Re:Bitcoin != Coins (Score:5, Insightful)
There's nothing subjective about the fact that you could, as some particular time not specified by the summary, exchange those 650,000 bitcoins (not "bit coins" as the summary would have it) for $370m.
No, there was never such a time. When MtGox collapsed there was less than 13 million bitcoins total, most of which is being hoarded. Looking at the exchange trade volume [blockchain.info] there's maybe $5-10 million dollar daily liquidity. In order to sell out without the market crashing you probably couldn't sell more than 10% of that so it'd take years to cash out. And that's assuming you don't overdo it and spook the herd so they all cash out too.
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Don't get me wrong, I am sure there are plenty of people dealing with bitcoin for what it is. A speculate "stock" with limited daily volume. But they don't go round ranting about it much.
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the proper answer is that they are worth whatever you can get for them. Aluminum was once a precious metal worth more than gold.
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AC Shit or GMO+Chems? (Score:3)
At least my shit can be used to fertilize something.
Maybe it's time for me to stop buying organic fruits & veggies at the grocery store.
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A word in English having different meanings in different contexts. It's unheard of!
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$370 million is subjective. 650,000 inherently worthless pieces of information went missing.
"Inherently worthless" is the salient feature of money. When you trade things of intrinsic value you are bartering. It's only the fact that you were taught to value "dollars" without question that makes you think "$370 million" has any intrinsic value.
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With bitcoin, the only thing you are trading is the knowledge that somebody wasted a shitload of electricity.
Re: Bitcoin != Coins (Score:1)
Which is more than you are trading with cash.
Even trading gold is nothing more than trading the energy consumed in mining it.
Re: Bitcoin != Coins (Score:4, Funny)
trading gold is nothing more than trading the energy consumed in mining it.
Gold comes from mines? I always believed it came from pawn shops and elderly relatives.
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trading gold is nothing more than trading the energy consumed in mining it.
Gold comes from mines? I always believed it came from pawn shops and elderly relatives.
Well, the generation of that gold probably occurred in a process even more energy intensive than bitcoin mining, such as a very large star going out with a bang. After that it's just been transferred around.
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Gold comes from mines? I always believed it came from pawn shops and elderly relatives.
I thought it came from Fox news...damn you Gretchen Carlson! You damn minx, you shall not fool me again!
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Boom Godwind! And i win internets for the day.
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It is interesting that Switzerland did all they could to protect the secrecy of the accounts of war criminals and dictators, but did not think twice before sharing information about US customers with the IRS.
Swiss banking secrecy and swiss cheese now have many things in common (they stink, they have holes, nobody cares about it, etc).
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"Cash" is backed by the government that printed it.
Bitcoin is backed by?
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If the cash stolen is in an FDIC account, then yes, it does.
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Interesting, I did not know that the FDIC did not cover theft from the bank (electronic or otherwise), since the main point would seem to be to instill consumer confidence in putting their money in banks in the first place. Thanks!
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since the main point would seem to be to instill consumer confidence in putting their money in banks in the first place
Other issues are addressed by federal regulations and required rules that banks need to adhere to and routine auditing that banks have to undergo in order to protect against fraud/theft. There are minimum dollar amounts in capital required to be chartered as a bank, and there are additional private insurance protections banks are essentially required to take out, so banks have to hav
Re: Bitcoin != Coins (Score:2)
Then care to explain why it is not worth zero?
Dont forget to go to work tomorrow so you can get paid in yuor "worthless" currency... Later you an use it to get a coffee and groceries..
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"Cash" is backed by the government that printed it.
I really don't know whether I should laugh or cry.
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Try this.
Go to say a gas station, convenience store, etc and offer to pay by "bitcoin" and see what they do (laugh or cry).
I will do the same with "cash" which MUST be accepted at those stores and walk away with my product.
One says "legal tender" and therefore is considered a legally mandated form of payment, the other is not.
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With bitcoin, the only thing you are trading is the knowledge that somebody wasted a shitload of electricity.
The technical term would be 'seigniorage' [wikipedia.org].
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to the best I could determine seigniorage is the cost of making money, eg metals, printing presses, etc. There were some historical uses but those don't work any more.
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Yeah. Please explain how in fact you can do this. The reality is that any scheme that uses a different security algorithm has different characteristics. Proof-of-work wasn't chosen at a whim, but as a technically sound basis on which to build a crypto-currency. There are other work schemes, but none of them have the proven track record of plain old Bitcoin.
Also, shitloads of electricity is very relative. How much should we spend on a global payment network that no one entity controls? In my view of the worl
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If your an economist you don't like doing things without utility. Artificially restricting supply of something does not require that much wasted effort. Hell even the human working hours wasted on designing the ASIC miners would have been better used to do something else.
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With bitcoin, the only thing you are trading is the knowledge that somebody wasted a shitload of electricity.
So bitcoin is bad because the metal presses that stamp out coins and the printing presses and cutters that make bills all run on magical unicorn farts instead of electricity?
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> "Inherently worthless" is the salient feature of money. When you trade things of intrinsic value you are bartering.
They are not disjoint sets. Money was whatever commodity had the most acceptability and was easiest to trade. Normally that happened to a commodity with features like durability, scarcity, divisibility, etc. The US dollar is backed almost entirely by debt, so it is not true to say it is inherently worthless. Those debts (Treasury bonds, mortgage-backed securities, and bank loans) have
Retirement accounts were not liquidated ... (Score:1)
Are you referring to those investment firms that failed? In that case you should know that the retirement accounts they managed were transferred to other companies. So they too have recovered
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Nobody should have lost any money unless you were dumb enough to buy Bitcoins.
I see your memory faded faster than the retirement accounts that were fucking liquidated from the financial meltdown in 2008, which involved exactly zero digital currency.
HUH? I think citation is required for such a bold statement.
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$370 million is subjective. 650,000 inherently worthless pieces of information went missing.
One of the principals of economy is that everything is worth what somebody is willing to give you for it. The 650,000 bitcoins were worth $370 million because somebody would have been willing to give that much money for them. Of course they are inherently worthless, just like every other piece of matter or information or string of bits. Nothing has intrinsic worth. It only has the worth of what someone is willing to give you in trade for it.
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Actually, it's generally accepted that things like oxygen and water have inherent worth - it's just that most such things exit in such quantity that they have very little *economic* worth - a largely unrelated concept.
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The 650,000 bitcoins were worth $370 million because somebody would have been willing to give that much money for them.
We don't know that. In fact, I would consider it highly likely that if someone tried to unload 650,000 bitcoins at once, the value of the bitcoin would quickly drop enough so that those 650,000 wouldn't be worth $370m anymore.
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Slashdot covered this on a previous release? (Score:2)
Didn't we all talk about this ages ago and the firm conclusion was MtGox used the bug the transaction malleability bug to their full advantage and ran off with everyones money?
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Well yes, that would be one way hackers could steal assets. If however there was no hacking involved in the majority of the fraud, then that would suggest an inside job, wouldn't it?
Punctuation and Capitalization Errors (Score:2)
Why do people make so many errors when putting the name of the Magic The Gathering Online eXchange in a news story?
It's almost like it isn't still a hobby site.
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Well, the modus operandi and know-how of the operator didn't change much, so there...
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Can't sites change use in your world? At one point it might indeed gave been "Magic the Gathering Online Exchange", but it doesn't always have to stay that.
explain to me (Score:2)
What I don't understand is this: Bitcoin is a distributed network. We know (or can know) which bitcoins were "lost" in MtGox. What is "true" in the Bitcoin world is determined by the "opinion" of the network.
So couldn't the top 5 or 10 players in the network, who collectively have something like 75% of the computing power, collude and simply invalidate the transactions out of MtGox?
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What I don't understand is this: Bitcoin is a distributed network. We know (or can know) which bitcoins were "lost" in MtGox. What is "true" in the Bitcoin world is determined by the "opinion" of the network.
So couldn't the top 5 or 10 players in the network, who collectively have something like 75% of the computing power, collude and simply invalidate the transactions out of MtGox?
No, the top largest mining pools cannot because:
1) A 51% attack doesn't change the blockchain history or allow one to steal funds out of existing accounts. If this even ever did occur(unlikely) they could simply either temporarily deny new transactions from being processed or make 1-3 double spends before being noticed and stopped.
2) The miners in the mining pools can instantly switch pools if their trust is misplaced by the pool operators with no effort and have done so repeatedly in the past where top min
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no. assume you have one transaction 50 blocks ago that requires changing. In order to preserve every other transaction in those 60 blocks, you will need to recalculate all 60 blocks (each block of transactions feeds into the hash algorithm for the next block). There are thousands of blocks that need to be "fixed" to do what you are talking about. The computing power required to "catch up" to the current blockchain is obscene unless everyone agrees to stop working on this blockchain until that is done.
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> We know (or can know) which bitcoins were "lost" in MtGox
No, we can't, because those were not block chain transactions. They were funds transactions internal to Mt. Gox's account books. Let's assume Mt. Gox had 500,000 bitcoins in "cold storage" (the private keys printed out and stored in a safety deposit box, where no hacker can get to them). Some of those 500,000 coins belong to Mt.Gox itself, from accumulated trading fees. The rest belong to customers. Who owns what is kept track on their inter
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Thanks to you and everyone else for their answers, now I understand the whole thing a lot better.
Here's your insightful comment (Score:3, Interesting)
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They probably mention this in the fine print of the TV ad [slashdot.org].
Electronic payment service BitPay this week launched a campaign aimed at making Bitcoin transactions more appealing to mainstream business owners — the first time Bitcoin has been featured in a TV spot. Conceived by Felton Interactive Group, the two new ads promote Bitcoin and BitPay as a secure alternative to traditional credit-card transactions.
Re:Here's your insightful comment (Score:4, Insightful)
it's not hacking if you're on the inside and you own the playing field. It's still theft albeit of digital bits.
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No. That's called being an investment bank.
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investment banks deal in all types of risk, if you invest in the products they sell you can expect loss to zero to some return; it comes with the territory. MTGOX was considered a safe haven for Bitcoin, a bank but unlike a bank there was no regulation to insure that fraud didn't occur and that the deposits would have some sort of insurance against loss, whether by overt or inadvertent acts. Instead, insiders of MTGOX stole Bitcoins it gets that's fraudulent activity. People entrusted these digital asset
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you need to look up the definition of fraud. You most definitely can defraud people without hacking, especially when you are on the inside such as those within MT Gox. taking coins from peoples accounts and selling them is defrauding them and would require no hacking from someone within Gox.
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you need to look up the definition of fraud. You most definitely can defraud people without hacking, especially when you are on the inside such as those within MT Gox. taking coins from peoples accounts and selling them is defrauding them and would require no hacking from someone within Gox.
It would have been nice if TFA explained what it was talking about, re: fraud, because I doubt its what you suggest.
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It would have been nice if TFA explained what it was talking about, re: fraud, because I doubt its what you suggest.
I don't.
While it's possible TFA meant something else, I said from the beginning that it was probably an inside job. Anything is a galaxy-scale violation of Occam's Razor.
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It is almost certainly what he suggests. especially as they are talking about both fraud and hacking as distinctly separate crimes that took place. It is highly suspected (with quite a lot of evidence to support it) that those within MT Gox were the ones that stole the money and the hack was more a convenient way to try to hide what they had been doing.
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what kind of fraud do you think it is? seems kinda straightforward.
Better news report (Score:1)
http://the-japan-news.com/news/article/0001825662 [the-japan-news.com]
"The MPD is currently investigating Mt. Gox, suspecting a person who is familiar with the exchange system may have misappropriated bitcoins of the company’s customers."
That unambiguously sounds exactly like what the parent post posited.
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Re:Here's your insightful comment (Score:5, Interesting)
But here's the interesting thing.
Who owns what? According to the hard core of bitcoin fans, it is based on one principle - that the blockchain is the final word on that issue, at least as it concerns bitcoins themselves. If you have the key, the coins are yours.
If you say "those bitcoins aren't yours, they're stolen!" you're implicitly accepting another standard of property - of who owns what - as higher than the blockchain. Then you concede to the messy passions of society to determine who owns what, rather than the mathematical certainties of the block chain.
Bitcoin fans are a bit two-minded on this. On one hand, they demand that money in anonymous accounts belongs to whoever controls the keys, and it's none of your business how they got there. On the other, some do call for blacklisting coins, e.g. the coins FBI seized when Silk Road went under. The technology actually makes that possible, unlike with cash or even conventional digital payments.
I'm all for convicting Karpeles for fraud (and in fact this article is old news to me - despite lots of anonymous accounts trying to pooh-pooh it, investigations of the block chain made a convincing case for fraud in the weeks after MtGox's fall), but I'm also for recognizing the limits of the blockchain, and I'd like BTC fans to realize it can't be a substitute for government, or even government-issued currency.
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Well, an exchange really works by taking the bitcoins - they now own them, not you, all that you have is an entry in some other database - a digital IOU. They could have used the blockchain to store a tamper-proof backup of who was the "real" owner of the coins held by the exchange, too, but chose not to.
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