New Clues About Why Mt. Gox Failed (thedailybeast.com) 50
An anonymous reader writes: The Daily Beast is investigating internal emails, contracts, and new information provided by a former accounting employee at Mt. Gox for clues about how and why the world's largest bitcoin exchange failed in 2014. They conclude that CEO Mark Karpeles "bought a company already missing tens of thousands of bitcoins" in 2011, leading to an email exchange a few months later where the previous owner suggested ways to make up the $800,000 shortfall. Unfortunately, Karpeles "had signed a non-disclosure agreement that left him unable to discuss the loss," and after a second larger hack, he moved the majority of bitcoins offline into "cold storage," leaving only enough online to complete transactions.
According to the article, former Mt. Gox employees "claim rogue U.S. government agents seized $5 million of Mt. Gox funds in summer 2013 in retaliation for Karpeles's refusal to cooperate with them. This seizure supposedly cut into the firm's operating reserves, which may have been the beginning of the end, at least according to the former Mt. Gox accountant."
While $450 million eventually disappeared, Thursday ZDNet reported that a class-action lawsuit brought against the bitcoin exchange by investors "has been dismissed."
According to the article, former Mt. Gox employees "claim rogue U.S. government agents seized $5 million of Mt. Gox funds in summer 2013 in retaliation for Karpeles's refusal to cooperate with them. This seizure supposedly cut into the firm's operating reserves, which may have been the beginning of the end, at least according to the former Mt. Gox accountant."
While $450 million eventually disappeared, Thursday ZDNet reported that a class-action lawsuit brought against the bitcoin exchange by investors "has been dismissed."
illegal money laundering... obviously (Score:3, Insightful)
Mt Gox was used for illegal money laundering. This whole topic is like asking, "Why did the mafia get arrested?" ... well, duh.
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One can only conclude that a certain level of protection is being provided in exchange for inside information and back up files, perhaps even that Mt Gox was set up to collect information then collapse when it was no longer needed and provide a mountain of bitcoin for espionage purposes. This considering whose money was lost and how vengeful those types are, they basically live for ego and revenge, they are being kept quite effectively at bay.
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People may intellectually realize this is the case, but they don't really believe it on an emotional level, which is why they're unable to accept there's no real difference between Bitcoin and the US dollar.
Re:illegal money laundering... obviously (Score:5, Insightful)
People may intellectually realize this is the case, but they don't really believe it on an emotional level, which is why they're unable to accept there's no real difference between Bitcoin and the US dollar.
That's like saying there's no real difference between my inept artistic endeavors and Da Vinci's Last Supper because they are all images painted on flat surfaces. The US dollar is backed by the world's largest market economy, a powerful government of a sovereign state and a sophisticated financial system capable of processing huge numbers of complex transactions a day (for example annual USD/EUR FX transactions are running at about $1,300 billion (gross) per day). Bitcoin is based on an arbitrary choice to follow one particular genesis block, can't do more than 3 tps due to inherent limitations, and is backed by people who keep writing extremely buggy software in PHP and Javascript and other people who make a living as drug dealers, rip-off merchants and ransomware shits. Pretending these are equivalent is not sensible.
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That's like saying there's no real difference between my inept artistic endeavors and Da Vinci's Last Supper because they are all images painted on flat surfaces. The US dollar is backed by the world's largest market economy, a powerful government of a sovereign state and a sophisticated financial system capable of processing huge numbers of complex transactions a day (for example annual USD/EUR FX transactions are running at about $1,300 billion (gross) per day). Bitcoin is based on an arbitrary choice to follow one particular genesis block, can't do more than 3 tps due to inherent limitations, and is backed by people who keep writing extremely buggy software in PHP and Javascript and other people who make a living as drug dealers, rip-off merchants and ransomware shits. Pretending these are equivalent is not sensible.
^ AC quoted for truth...
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it's like if I start saying four leaf clovers are worth something. You can go find (mine) them and then pick how much you want to sell them for.
That is like starting to say gold is worth something, when you can just go mine more of it and pick how much you want to sell it for. Yes, someone might counter claim that gold has industrial uses, but so do clovers as part of animal feed. But the price of gold is dominated by its use in investment, speculation, and cultural/aesthetic uses.
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But the price of gold is dominated by its use in investment, speculation, and cultural/aesthetic uses.
It also has intrinsic value in all sorts of scientific venues and industrial processes. It's irreplaceable (at least so far) for use in some applications, including medicine, computers, and electronics.
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It also has intrinsic value in all sorts of scientific venues and industrial processes.
Yes... which was said already in the sentence before your quote.
It's irreplaceable (at least so far) for use in some applications, including medicine, computers, and electronics.
For most industrial uses, it is not even close to irreplaceable. It turns out things like gold plating are still pretty cheap despite the price of gold because you use so little. If the price were even higher, you can find other metals or alternatives for most of those uses. Only about 10% of gold is used for industrial uses, and the vast majority of that is for gold platting to protect against corrosion.
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Maybe I'm just stubborn but I honestly don't understand how people can think that it's viable as an actual currency.
You answered your own question:
Also if you look at all the uses for BitCoin I'm sure that the majority of them are not for legal transactions.
Of course, that's only one of the areas where Bitcoin (lowercase 'c') excels. The value of Bitcoin comes from being a decentralized global non-censorable transaction network.
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Bitcoin like anything else is spectrum. Over at one end of the spectrum there are people linked with criminal activity that want privacy in regards to currency because their transactions are illegal and governments would use the transactions themselves as a means of identifying criminal activity.
Over at the other end of the spectrum are economic experts who see it as a liberating exchange medium unencumbered by bureaucracy, unfettered by government interference.
Also it's better than cartels like Paypal.
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Wow, you have the lowest UID I've seen in a long time.
"rogue U.S. government agents" (Score:3)
Who else thought "NID" from the Stargate universe???
Magic the Gathering Online eXchange (Score:1, Offtopic)
Calling it "Mt. Gox" instead removes a very major clue as to why it failed. For some reason a hobby card swapping site turned out to be less than ideal for exchanging bitcoins with currency - who would have thought?
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Vices of Consent (Score:2)
There's no way this would have been an enforceable contract. There can't be a "meeting of the minds" [wikipedia.org] when one party is withholding the fact that nearly a million dollars is missing from the company.
NDA's do not cover criminal activity (Score:1)
IANAL but NDA's do not cover criminal activity and can't compel you to be complicit in covering up a criminal activity (and lying to customers about the state of their assets is a crime). You also can't indemnify someone against illegal activity they committed (from The Daily Beast article). This article almost feels like it placed by Karpeles lawyers because it doesn't even try to question any of these claims. There has to be something else going on here... If you buy a company and find out a substantia
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Yep... for the amount of money involved, there should have been lawyers involved...
Yes, I don't always like them either, but they do serve a purpose, one is to avoid this nonsense...
But yes, Karpeles might just be an idiot, he won't be the first or last.
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Or he could be a savvy businessman who took a calculated risk: a million missing vs. lots of growth potential.
Because it's still McBucks... (Score:2, Interesting)
Doesn't matter if it's got a wonderfully elegant underlying structure, it's still a FUNGIBLE, TRADEABLE RESOURCE, with a set of mechanisms controlled by PEOPLE.
If a company town somewhere offered the perfect elegant scrip [wikipedia.org] system, where demand is balanced against resources to ensure complete fairness in the system... if people are in control of it, they're going to find some way to exploit their position over others with that system.
Even though it was getting popular, it's still a niche currency, and it was
easy one (Score:2, Insightful)
Mt Gox failed because bitcoins are a stupid idea and the people who have been pushing them have a childish view of money and finance.
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Actually, that had very little to do with it. They were sloppy and kept losing bitcoins. The same problem would exist if they were holding dollars, rubles, or gold bars. Rule number 1 when holding something valuable: don't lose it!
Not a Mountain (Score:5, Informative)
The website was originally named because it was a trading site for "Magic the Gathering" cards. It's an acronym for "Magic The Gathering Online Exchange". It's not a mountain named Gox.
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It's MTGOX, not Mt. Gox.
The website was originally named because it was a trading site for "Magic the Gathering" cards. It's an acronym for "Magic The Gathering Online Exchange". It's not a mountain named Gox.
This should fixed. It's time to name a mountain Gox.
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May I introduce you to their logo?
https://www.mtgox.com/img/mtgo... [mtgox.com]
It was the butler with candlestick in the library (Score:2)
It failed for the same reason it succeeded. (Score:3, Informative)
It was an anti-establishment un-regulated bank for a rogue currency. That was a huge draw with a certain segment of society.
But it turns out that there are good reasons for bank regulations.
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A common theme of anti-establishment movements (Score:2)
They eventually re-discover which parts of the establishment were actually pretty important.
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