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MtGox Files For Bankruptcy Protection

Soulskill posted about 2 months ago | from the all-about-the-bitjamins dept.

Bitcoin 465

Sockatume writes "The beleaguered MtGox bitcoin exchange has officially filed for bankruptcy protection in Tokyo. According to the Wall Street Journal, Bitcoin held an impromptu press conference that addressed recent rumors. They state that they have over $60m in liabilities against just $30m in assets, and confirm the loss of over $500m worth of Bitcoins, split between customers' balances (750,000 BTC) and company assets (100,000 BTC). Owner Mark Karpeles said, 'There was some weakness in the system, and the bitcoins have disappeared. I apologize for causing trouble.'"

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465 comments

first (-1)

Anonymous Coward | about 2 months ago | (#46366833)

first comment

Re:first (-1)

Anonymous Coward | about 2 months ago | (#46366849)

Achievement unlocked.

Ha ha (5, Insightful)

BasilBrush (643681) | about 2 months ago | (#46366841)

And so the libertarian unregulated money dream dies.

Re:Ha ha (-1)

Anonymous Coward | about 2 months ago | (#46366851)

Nah, they'll get suckered in by Mt.Gox #2 and will get to laugh at buttcoiners even more.

Re:Ha ha (1, Funny)

Anonymous Coward | about 2 months ago | (#46366865)

Well, that's OK. I'm sure it's FDIC insured.
Oh, wait .... WHAT?!?!!!!
Why wasn't this regulated by the government?!!?
Wait, what am I saying? Government is bad!
[Brain assplodes]

Re:Ha ha (5, Funny)

Anonymous Coward | about 2 months ago | (#46366869)

A little too soon son...
As far as I know, the US dollar hasn't died yet.

Re:Ha ha (4, Insightful)

LordRobin (983231) | about 2 months ago | (#46366927)

I recently checked Reddit's /r/bitcoin, to see how the True Believers were taking the latest developments. To hear them say it, Bitcoin has already recovered off its lows, which mean everything is fine and all this bad news is just FUD spread by haters. Bitcoin believers truly live in their own universe.

------RM

Re:Ha ha (4, Insightful)

AmiMoJo (196126) | about 2 months ago | (#46366967)

To be fair there is a lot of FUD in the story. How did "bitcoin", a distributed crypto-currency, do a press conference? They mean someone claiming to speak for it did.

I'm not sure how they calculate their liabilities are only $60m either, if they own depositors $700m worth of BTC. Maybe they are hoping that their own collapse will devalue the currency so much their liabilities will fall that far.

Re:Ha ha (2)

JoeMerchant (803320) | about 2 months ago | (#46367037)

I don't think there is any clear conversion of liability in dollars to liability in bitcoins.

They are liable for Bitcoins that they don't have, they will likely never pay those back, just like their shortfall on the dollar side.

As any rabid Bitcoin user will tell you - conversion to dollars is irrelevant, the value is intrinsic. (Surpass any mint-stick, Or marshmallow mouthful you munch.)

Re:Ha ha (1)

Desler (1608317) | about 2 months ago | (#46367065)

It's not FUD, that's just a poorly-worded summary. They obviously meant to say "The bitcoin exchange".

Re:Ha ha (1)

Talderas (1212466) | about 2 months ago | (#46367089)

They don't owe depositors anything unless the contracts they signed said they would guarantee X amount or value of bitcoin. The $60m in liabilities might somehow be related to their own loss of bitcoins since the value of 100,000 BTC is just shy of $60m.

Re:Ha ha (5, Interesting)

Anonymous Coward | about 2 months ago | (#46367113)

For a start, I doubt you understand what FUD means.

I also fear you didn't actually read the article, just summary borked by Slashdot "editing".

I'm uncertain what they meant to say, but I guess they meant either "Bitcoin Foundation" (Karpeles was one of board members there and now resigned) or "Bitcoin exchange" (i.e. MtGox).

Re:Ha ha (4, Funny)

nitehawk214 (222219) | about 2 months ago | (#46367211)

For a start, I doubt you understand what FUD means.

I also fear you didn't actually read the article, just summary borked by Slashdot "editing".

I'm uncertain what they meant to say, but I guess they meant either "Bitcoin Foundation" (Karpeles was one of board members there and now resigned) or "Bitcoin exchange" (i.e. MtGox).

Well done sir.

Re:Ha ha (2)

MachineShedFred (621896) | about 2 months ago | (#46367143)

Or, the submitter (and editor) are bad at the english language and actually meant to say that MtGoX held the impromptu press conference.

At least, that's how I interpreted it, since it's unlikely that a random Bitcoin guy could speak authoritatively regarding the financial mess that is MtGoX.

Re:Ha ha (1)

Guppy06 (410832) | about 2 months ago | (#46367333)

I'm not sure how they calculate their liabilities are only $60m either, if they own depositors $700m worth of BTC. Maybe they are hoping that their own collapse will devalue the currency so much their liabilities will fall that far.

Creditors owed in Japanese Yen will only accept payment in Japanese Yen. Debts owed in Bitcoin will probably be cloaked by an SEP field as far as Japanese financial and bankruptcy law is concerned.

Re:Ha ha (2)

tsqr (808554) | about 2 months ago | (#46367371)

To be fair there is a lot of FUD in the story. How did "bitcoin", a distributed crypto-currency, do a press conference? They mean someone claiming to speak for it did.

It's the summary that screwed up the press conference reference (what a shock). According to the WSJ article, the press conference was held by Mark Karpelès and his team of lawyers.

Re:Ha ha (2, Insightful)

X.25 (255792) | about 2 months ago | (#46367115)

I recently checked Reddit's /r/bitcoin, to see how the True Believers were taking the latest developments. To hear them say it, Bitcoin has already recovered off its lows, which mean everything is fine and all this bad news is just FUD spread by haters. Bitcoin believers truly live in their own universe.

MtGox != Bitcoin

I hope it will come to you eventually.

Re:Ha ha (0, Flamebait)

Anonymous Coward | about 2 months ago | (#46367273)

Tis just a fleshwound, right? You buttcoiners sound like the Black Knight after ever single one of these major issues. Gotta keep the faith, eh?

Re:Ha ha (0)

invid (163714) | about 2 months ago | (#46366947)

The failure of Linux to become the dominant operating system before Android didn't mean that an open source operating system wasn't viable. It just need the right platform to thrive.

Re:Ha ha (3, Insightful)

Anonymous Coward | about 2 months ago | (#46367067)

Why, because a private organization failed to centralize a decentralized currency? If you think about, this is a success of Bitcoin: it will be extremely hard to centrally regulate or control this product. The lesson here is the one the crypto-anarchist always wanted you to learn: in a digital society, only you are able to provide your own security, and only you are trust worthy.

These developments will alter completely the nature of government regulation, the ability to tax and control economic interactions, the ability to keep information secret, and will even alter the nature of trust and reputation.

-- The Crypto Anarchist Manifesto [mit.edu]
-- Timothy C. May
-- tcmay@netcom.com

Re:Ha ha (2)

Big Hairy Ian (1155547) | about 2 months ago | (#46367069)

Surely this will just make the other exchanges tighten their security. Wouldn't be surprised if some of them temporarily suspended BitCoin but it's not the end for BitCoin.

Re:Ha ha (1)

Anonymous Coward | about 2 months ago | (#46367085)

Give your money to some random guy and it goes missing?

Is anyone surprised?

Re:gambling (2)

JcMorin (930466) | about 2 months ago | (#46367147)

Knowing all the problems that Mt.Gox created BEFORE they stop the withdrawal (ddos, bank delays, bad PR, bad code). My best guess is that most people that had coins there were speculators (because the price was higher because of the delayed bank transfer). Real Bitcoin users don't keep their bitcoins in an exchange but on their device. I still feel sorry for everyone that lost something, but life goes on and other exchanges will add more transparency about their reserve and better software code.

Re:gambling (5, Insightful)

BasilBrush (643681) | about 2 months ago | (#46367381)

Real Bitcoin users don't keep their bitcoins in an exchange but on their device.

No True Scotsman lost money on Bitcoin.

More like... (4, Funny)

Anonymous Coward | about 2 months ago | (#46366843)

Owner Mark Karpeles said, 'I'm a bad widdle boy', then jumped in his solid gold flying Lamborghini and flew to to his 50 acre estate in Barbados.

Legitimization (5, Funny)

mkg (40510) | about 2 months ago | (#46366853)

This debacle should only help legitimize bitcoin, as corruption surrounding the currency is now a public matter.

Re:Legitimization (-1)

Anonymous Coward | about 2 months ago | (#46366877)

Hahaha. Either you forgot a sarcasm tag or you buttcoiners sure are delusional to the end, aren't ya? This is like the 4th or 5th exchange that has gone bust, right?

Re:Legitimization (0)

Anonymous Coward | about 2 months ago | (#46366945)

I don't know about going bust, but I do remember hearing about a couple exchanges in China that just decided to pack up shop and hit the bricks with all those shiny Dunning-Krugerrands.

Re:Legitimization (5, Informative)

pla (258480) | about 2 months ago | (#46367123)

This is like the 4th or 5th exchange that has gone bust, right?

Actually more like 18 [wired.co.uk], but MtGox counts as the first major exchange to fail. The rest of those amount to you or I throwing up an "exchange" as our CompSci101 project and then vanishing when they lost their shirts.

The loss of MtGox definitely counts as a blow to Bitcoin, but as others will no doubt point out, it had already started "failing" months ago (when you have a good 20% price spread vs the next highest exchange and you don't see arbitrage occurring on a massive scale, you know you have a problem). Any fools with either USD or BTC left in Gox since the beginning of the year (and even before that) pretty much stopped paying attention and deserve what they got.

And the effect on the BTC market since then bears that out - The price initially plummeted, but has already stabilized at 2/3rds its previous stable value. If anything, this counted (and still does, IMO) as a great opportunity to get in during a market correction and load up on deeply discounted BTC.

so you can predict performance then? (2, Informative)

Anonymous Coward | about 2 months ago | (#46367385)

> a great opportunity to get in during a market correction and load up on deeply discounted BTC.

Sounds just like those stock pump-and-dump spam emails I get.

Re:Legitimization (1)

Anonymous Coward | about 2 months ago | (#46366909)

Is that sarcasm? Bitcoin value is based on public image, and it's public image is wrecked.

Re:Legitimization (1)

AmiMoJo (196126) | about 2 months ago | (#46366979)

I dunno, it seems fairly resiliant. Everyone thought its value was due to the ability to buy drugs with it on Silk Road, but the close of that didn't do it much harm. Its value is already recovering after MtGox closed.

Re:Legitimization (0)

Anonymous Coward | about 2 months ago | (#46366913)

Yes, this is super news for bitcoin. rah rah rah

Re:Legitimization (0)

Anonymous Coward | about 2 months ago | (#46367297)

Stop spreading FUD you meanie head!!

- Average buttcoiner

But it isn't a public matter (1)

wiredog (43288) | about 2 months ago | (#46367219)

According to Janet Yellen [thehill.com]

The Federal Reserve simply does not have authority to supervise or regulate bitcoin in any way

After all, it's not a legitimate currency, is it? So no reason for the Feds to get involved! Which is also what her Japanese counterpart is saying.

"some weakness" (-1, Offtopic)

macson_g (1551397) | about 2 months ago | (#46366859)

Wonder how many of these "weaknesses" were a result of implementing SSH in PHP [magicaltux.net] and other coding frolics.

Re:"some weakness" (4, Informative)

abigsmurf (919188) | about 2 months ago | (#46366935)

The weakness was apparently down to the site treating a txid (transaction ID) field as a unique identifier. Turns out not only was it not actually a unique transaction identifier, it could also be spoofed easily without altering the (real) destination for the transaction. Made it trivial to make fake deposits and real withdrawals.

MTGox's fault for not understanding a spec whilst using it to move vast sums around but it probably highlights the importance of good naming practices when creating a spec.

Re:"some weakness" (0)

AmiMoJo (196126) | about 2 months ago | (#46367019)

I thought they were blaming transaction malleability. That is different to what you describe, basically fooling MtGox into paying out the same money twice.

Re:"some weakness" (2, Informative)

Anonymous Coward | about 2 months ago | (#46367251)

No, that's exactly what OP is describing. The fact that a single transaction can have different binary formats owing to variations in zero-padding on the txid is called "transaction malleability".

Re:"some weakness" (4, Insightful)

Anonymous Coward | about 2 months ago | (#46367047)

Making a mistake is one thing. Not realising that something is wrong when over $500000000 slowly disappears from your accounts is the criminal thing. I mean, in practice this must mean that they constantly noticed their hot wallet is empty (when it should not be) and filled it from the cold wallet without investigating anything. Over and over and over again.

Amazing.

Re:"some weakness" (-1)

Anonymous Coward | about 2 months ago | (#46367301)

It's funny. A dollar bill "just works." It doesn't need a fucking instruction manual or an army of smug geeks saying "oh you're just not doing it right."

Unlike Bitscam.

A 2000 year old Roman coin still has value thanks to the fact that it was made out of something with intrinsic value.

Unlike Bitscam.

But that's OK, Slashdot always has it's stupid obsessions whether it's carbon nanotubes or Bitscam.

"...and the bitcoins have disappeared." (1)

CaptainStumpy (1132145) | about 2 months ago | (#46366871)

Epic fail is epic.

Re:"...and the bitcoins have disappeared." (3, Insightful)

Anonymous Coward | about 2 months ago | (#46366971)

Fail for who, lets face it - people who were in prime position to steal all bitcoins from mtgox were mtgox owners/employees. If you had half a billion dollars in cash sitting in front of you, wouldn't you make off with it? I know i would.

Re: "...and the bitcoins have disappeared." (0)

Anonymous Coward | about 2 months ago | (#46367025)

No I would not make off with property that wasn't mine and the fact that you would tells me call I need to know about you.

Re:"...and the bitcoins have disappeared." (0)

Anonymous Coward | about 2 months ago | (#46367195)

If you had half a billion dollars in cash sitting in front of you, wouldn't you make off with it? I know i would.

Doesn't suit my moral values really.

Re:"...and the bitcoins have disappeared." (2)

tippe (1136385) | about 2 months ago | (#46367217)

This is my conspiracy theorist side talking, but I wonder if the heist was actually state sponsored (as opposed to being done by "criminals"). What better way to destroy a currency than to completely erode any public trust in it? And what better way to do that than to orchestrate one or more "epic fails" like this one, that have people talking and questioning the security of bitcoin. Maybe it wasn't so much about stealing the money as it was to undermine the currency itself.

Now please excuse me while I go polish my tinfoil hat...

Re:"...and the bitcoins have disappeared." (2)

AmiMoJo (196126) | about 2 months ago | (#46367213)

That's the thing though, they haven't disappeared. The Bitcoin ledger is public, every transaction traceable. MtGox should know or at least be able to figure out where the coins went, and then see what they were spent on.

That's the problem with stealing Bitcoins - like real money you still have launder them somehow.

render onto... (-1)

Anonymous Coward | about 2 months ago | (#46366881)

us poor uns are primarily debt slaves with gadgets who typically cannot even keep up with our prosperitarian pound of flesh interest debt. our spirits & what tears & innocence we still have are our 'currency' more valuable than all of the man made failures so far... thanks moms.. little miss dna cannot be wrong.. see you there

It is a pyramid game (0)

Anonymous Coward | about 2 months ago | (#46366883)

As long as bitcoins are not widely used as actual payment, it is just a pyramid game. Bitcoins keep their value because people want them.
This technical glitch is just a minor problem compared to the big crash once people realize you cannot use those bitcoins to buy anything real.

Re:It is a pyramid game (2)

devman (1163205) | about 2 months ago | (#46366961)

You can use bitcoin to buy things from both overstock.com and tigerdirect.com. Both of which are pretty big US retailers. Not saying that I would want to, but you could furnish a whole house just buying stuff from Overstock.

Re: It is a pyramid game (0)

Anonymous Coward | about 2 months ago | (#46367003)

Holy cow, there are a lot of anonymous commenters here bashing bitcoin. Judging by the lingo you come from the reddit-hating side of reddit.

Re: It is a pyramid game - Off-topic (1)

Anonymous Coward | about 2 months ago | (#46367303)

The reason for all the AC comments is that many moderators don't follow the rules for moderation. Many with moderator points see an opinion or fact they don't like and mod it down as flaimbait, troll, etc. even when it is a valid point or true fact, causing the commenters to lose karma. Mods using their points to effectively shout down and/or silence unpopular opinions or facts is the reason for the rise in AC commenting and is a sign of the groupthink censorship going on withing the readership of Slashdot.

Bitcoin did what? (5, Insightful)

LordLucless (582312) | about 2 months ago | (#46366901)

According to the Wall Street Journal, Bitcoin held an impromptu press conference that addressed recent rumors.

Bitcoin held an impromptu press conference? Did the Dollar and the Peso attend as well?

Oh, you mean Mt. Gox held an impromptu press conference. Yeah, well, whoever trusted an online card trading portal as if it were a bank deserves whatever they got, IMO.

Re:Bitcoin did what? (5, Informative)

Sockatume (732728) | about 2 months ago | (#46366955)

This one's on me and not the editors, somehow I went from "the exchange's owner so-and-so" to "the exchange" to "Bitcoin" in the space of about half a cup of coffee. Although the image of the bitcoin network showing up in person is an amusing one.

I'm annoyed with myself because the misconception that this is a Bitcoin issue and not a MtGox issue is one I try to dispel.

Re:Bitcoin did what? (2, Insightful)

BitZtream (692029) | about 2 months ago | (#46367139)

This is a bitcoin issue, you just don't want it to be.

Half a billion dollars worth of bit coins just disappeared, well, was just publicly announced as disappeared.

And there isn't shit that anyone can do about it.

Thats a problem, and its a problem that exists BY DESIGN.

Your currency is one for criminals. There will be a few innocents who could benefit from such a currency outside of the governments watchful eye, but your currency isn't outside the governments watchful eye. They still see everything that happens, and that too is BY DESIGN. They just don't help when something like this happens.

You have your advantages and ideals twisted into ways to commit theft without fear of repercussion and you haven't solved any of the tracking issues really, you're just ignoring them because the bit coin network can magically track all transactions as needed but no one else can syphon that data off for their own correlation ...

Seriously dude, open your eyes.

The fact that this happened AT ALL is a direct reflection on the very core design of BitCoin, and its not a bug, its intentional. Short sighted, but intentional.

Its a good experiment to use as a reference in the future, but for fucks sake man, read the writing on the wall.

Re:Bitcoin did what? (0)

Anonymous Coward | about 2 months ago | (#46366963)

No... not MtGox, BitCoin.

BitCoin consists of a group of developers that handle code changes and such. No, they didn't call the digital coin up to a podium to have a few words.

Are you really retarded or do you just play retards on the internet? lol

oopsie daisy (0)

Anonymous Coward | about 2 months ago | (#46366903)

We kinda misplaced half a billion dollars, sorry about that

Re:oopsie daisy (1)

BitZtream (692029) | about 2 months ago | (#46367017)

One really has to wonder how this happens.

I understand how it can happen, from a technical perspective, but only with effort. Negligence is hard to blame, because negligence of an admin, with the way things are logged now days generally means there is enough of a log between all copies of the servers involved for a site as popular as MtGox to piece together most of what happened and fix it. With reverse proxies/load balancers, application logs, database replication log files and all the like, and all the other bits that go with a cluster setup, you leave enough data laying around unless you actively work on deleting it when its no longer needed.

If someone is typically smart enough to go looking for data that needs to be cleaned up for security purposes, they've usually already made sure proper backup and audit procedures are in place to protect the data that needs to be stored, and they tend to make sure the important data gets stored. There is a pattern to of progression that seems to naturally protect from ignorance in large cluster.

Actually loosing half a billion dollars of someones virtual stash?

Bullshit.

It could happen, but it didn't. Hell, BitCoin has a built in transaction log that the 'network' has to agree on FFS. You know where some of this money went.

Re:oopsie daisy (1)

allcoolnameswheretak (1102727) | about 2 months ago | (#46367179)

Yeah, I would really like to know how this happened, because as far as I thought I knew, all BitCoin transactions are "logged" in a public "blockchain" or something, so you can actually track all transactions to their anonymous sources.

Falkvinge et all investigaton suggests inside job (5, Interesting)

davecb (6526) | about 2 months ago | (#46366919)

The Gox Crater: Crowd Detectives Reveal Billion-Dollar Heist As Inside Job [falkvinge.net]
Thousands of volunteering and self-organizing detectives have been meticulously laying a puzzle that reveals the Gox billion-dollar heist as an inside job. As smoke clears on the implosion of the Empty Gox bitcoin exchange, thousands of people in the community committed to revealing the truth behind the stonewalling exchange. What was claimed first to be a technical problem, then an outside theft, has been conclusively determined that the MtGox management knew too much, too long ago, to have this be an ordinary case of theft.

Re:Falkvinge et all investigaton suggests inside j (1)

MitchDev (2526834) | about 2 months ago | (#46366953)

Since these are Digital "coins" don't they have some unique property that can be identfied and tracked?

Re:Falkvinge et all investigaton suggests inside j (0)

sandytaru (1158959) | about 2 months ago | (#46367007)

They don't, not really. That was their whole point.

Re:Falkvinge et all investigaton suggests inside j (2)

BitZtream (692029) | about 2 months ago | (#46367053)

Yes, they do, you utterly missed the point. You are not anonymous in ANY way using BitCoin, exactly the opposite in fact. The only theory you can follow is that you can create so many fake identities that its impossible to figure out who you are, but again, this is false.

Re:Falkvinge et all investigaton suggests inside j (2)

smallfries (601545) | about 2 months ago | (#46367055)

And so the point of maintaining the blockchain with a record of where each coin goes is....

Re: Falkvinge et all investigaton suggests inside (2, Insightful)

Anonymous Coward | about 2 months ago | (#46367029)

Indeed they do. And some 400000 coins Karpeles publicly moved two years ago to prove ownership, still sit where he put them.

So it seems someone forgot their wallet password. Probably they didn't notice until people rushed to get out and they tried to dip into cold storage.

Re:Falkvinge et all investigaton suggests inside j (1)

Idimmu Xul (204345) | about 2 months ago | (#46367137)

is this the same as the other self organizing investigation that tracked the silk road bitcoins to bitstamp?

"I apologize for causing trouble." (4, Funny)

rmdingler (1955220) | about 2 months ago | (#46366983)

Sure. Alright. That's all the folks who lost Bitcoins could ask for is a heartfelt apology.

Your stewardship of Mt Gox resulted in a fairly significant black eye for the very currency you've plundered and/or allowed to be plundered.

I find your lack of remorse disturbing.

Re:"I apologize for causing trouble." (1)

Anonymous Coward | about 2 months ago | (#46367093)

> That's all the folks who lost Bitcoins could ask for is a heartfelt apology.

You do understand that as a CEO of a company based in Japan he is more or less obligated to do that.

The actual proceedings will follow.

This is actually good news (5, Insightful)

xiando (770382) | about 2 months ago | (#46366999)

Failed exchanges are supposed to die. This is how a free market is supposed to work. I have been warning against using MtGox since April 2013 and you can all go check my Bitcointalk posts to see that this is true. If you request a withdraw from an exchange and it suddenly takes two weeks instead of a few days before you get your money then it is time to get out. If the delay increases to four weeks then six then months then it's clearly time to not only get out but also warn others about this exchange. A whole lot of extremely stupid people ignored all the red flags and alarmbells and they lost money when this exchange went bankrupt. This is very good. A small percentage of the people who lost money at MtGox will learn from this and be more careful and picky as to where they place their money in the future. If you do not have control of the private keys of a Bitcoin then you don't have the Bitcoin, you have an IOU with someone who may or may not hold Bitcoin for you. The demise of MtGox will sadly make many of the idiots who lost money there cry for more government, more regulation and more fascism. Fascism is not a good solution, more personal responsibility is the solution. As I said, there were dozens of red flags yet people kept using this clowncar exchange. "but but but I can arbitrage because the price is 25% higher there" said a lot of people who ended up loosing their money. Well duh, why do you think that 25% premium was there in the first place, stupid? In short: Fools and their money are usually separated. If you can't bother to do five minutes of basic research of the place where you plan to place thousands or millions of dollars then you get what you deserve. This is, in my opinion, a good thing.

Re:This is actually good news (1)

Guppy06 (410832) | about 2 months ago | (#46367153)

A small percentage of the people who lost money at MtGox will learn from this and be more careful and picky as to where they place their money in the future.

Yeah: they'll keep their money in Yankee dollars instead.

Re:This is actually good news (5, Insightful)

BitZtream (692029) | about 2 months ago | (#46367169)

So what you're saying is that everyone is supposed to magically learn from this how to defend against the next exchange which does a better job of handling its theft so no one gets any red flags until its too late and they've take ALL of the money rather than just half of it? Is that what you're saying?

This job was sloppy. The next one will be bigger (assuming a collapse doesn't occur this time, which I don't think it will, probably 1 or 2 more first) and probably not show any signs that its happening in advance.

Re:This is actually good news (3, Informative)

Anonymous Coward | about 2 months ago | (#46367365)

So what you're saying is that everyone is supposed to magically learn from this how to defend against the next exchange which does a better job of handling its theft so no one gets any red flags until its too late and they've take ALL of the money rather than just half of it? Is that what you're saying?

YES! Well, not the "magically" part.

Here is the lesson: You do not store a crypto-currency on someone else's server. You maintain control of it yourself.

Now, you might need to convert that crypto-currency into a local currency, or vice versa. And to do that, you will need to find an individual or an exchange with a solid reputation (because you can not inherently trust them). But once that transaction is complete, you immediately take back control of your crypto-currency. You DO NOT leave it in someone else's control, ever.

Re:This is actually good news (0)

Anonymous Coward | about 2 months ago | (#46367313)

MtGox "failed"? Madoff failed. For MtGox it has worked out sweetly. Do you really believe they lost those bitcoins?

Nothing wrong here, right? (-1)

Anonymous Coward | about 2 months ago | (#46367009)

This was obviously a pyramid scheme gone bad. We blame regulated banks for the messy World economy collapses but allow this to happen? The real problem is young people coming out of college with no morals and a taste for quick money doing high risk creations like Bitcoin to screw people. Bernie Madolf looks like a choir boy to this stuff.

Not a shock (1)

TheCarp (96830) | about 2 months ago | (#46367011)

Not at all at this point. Hard to believe this went on for so long. If they had fixed it earlier, even a 5 or 10% loss would be a problem but, it would be something they could recover from. Down by half?

I mean, a 1% discrepancy in the books...shit, something is wrong, but you almost expect something like that now and again; hell my grandfather had an exta 10k in his account, and when he reported it to the bank they thanked him cuz they had been looking for where it was but couldn't find it....and 10k isn't even 1% of a small banks bankroll.

I would have considered it a temporary shut down emergency at somewhere under 10%.

If 1 in 10 of your assetts is vanished into thin air, isn't it past time to put everything on hold and investigate?

[ANN] Mt.Gox overview: January 2012 / Transparency (1)

SpankiMonki (3493987) | about 2 months ago | (#46367057)

Here's the thread on bicointalk [bitcointalk.org] where Mt Gox announced their first attempts at providing some operational/financial data to the bitcoin marketplace.

Surprise! They never followed through with their commitment. :-(

Get some popcorn (1)

Guppy06 (410832) | about 2 months ago | (#46367125)

It'll be interesting to see if the courts will restructure debts when the debts aren't delineated in "real money."

Building your cryptocurrency to be outside the regime of banking regulations may mean you can't seek the shelter of those same regulations when you get into trouble.

Sigh (1)

Anonymous Coward | about 2 months ago | (#46367159)

The problem is MtGox used a setup with known exploits that are completely avoidable and make no mistake MtGox is at fault here for bad security practices. You can't just fuck around when you're dealing with half a billion dollars... They're either the most incompetent sobs ever or they took everyone for a ride and stole their money and cried exploit. So what happened? Well I'm leaning on the latter myself, but that's just me.

I'm sure the picture will become clear as shit plays out over the next few months.

theft-proof by design? (0)

mt1955 (698912) | about 2 months ago | (#46367163)

Wasn't bitcoin supposed to be theft-proof by design?

There is some kind of chain of ownership built into each coin, right? So doesn't that mean a "stolen" coins can't really be spent then, because the chain of ownership is part of the coin and the thief will be exposed as soon as they try to use it.

Or something like that. I guess I just don't get it. If anyone can explain I'd appreciate it.

Re:theft-proof by design? (3, Informative)

bigmattana (646048) | about 2 months ago | (#46367369)

It is impossible for a Bitcoin to be copied or duplicated, but not stolen. Yes, the blockchain keeps track of ownership of each fraction of a coin as it travels from address to address. So the transactions are public but the addresses are fairly close to anonymous unless someone like the NSA or your ISP recorded internet traffic to attach it to an IP address. (You can see which addresses hacked or stolen funds went to but it is harder to figure out who is tied to those addresses.) If someone gains access to your private key, the blockchain has no way of knowing they are not the rightful owner. This is why most people with large amounts in their wallets keep it on an offline machine only or print it out on a paper wallet so there is absolutely no way of someone hacking in and stealing their private key.

Now in the case of Mt. Gox, it is not clear if they were actually hacked or if they lost so much because of this "transaction malleability issue", which is basically like receipt fraud in which people would make withdrawals and claim they were not paid, so Gox would pay them again. This is more like Gox getting "conned", not "stolen". Either way, it is looking like it was an inside job. There is just no way they could slowly lose this much money of this long of time period and not notice it.

How can they have only $60M of liabilities? (3, Interesting)

JoeyRox (2711699) | about 2 months ago | (#46367177)

When they lost $500M in Bit Coins, most of which belonged to their customers? Are they not treating customer deposits as a liability? Shouldn't that interest be represented in the bankruptcy proceeding?

Re:How can they have only $60M of liabilities? (1)

kthreadd (1558445) | about 2 months ago | (#46367221)

No. When handled correctly a bank or other type of financial institution should _never_ mix their own funds with their customers. They are completely separate entities.

Interesting attack on Bitcoin (5, Interesting)

wiredog (43288) | about 2 months ago | (#46367183)

From the AP Story [washingtonpost.com]

a weakness in the exchange's systems was behind a massive loss of the virtual currency involving 750,000 bitcoins from users and 100,000 of the company's own bitcoins. That would amount to about $425 million at recent prices.

The reactions of the various Japanese government officials are interesting. Essentially, there was no "theft" because Bitcoin is not a "real" currency. Which is an interesting attack. Anyone can steal your bitcoins and you have no recourse to the law because it isn't actually theft.

Re:Interesting attack on Bitcoin (1)

CrankyFool (680025) | about 2 months ago | (#46367277)

If it's government-protected currency, it's government-regulated currency. Bitcoin owners have been crowing for a while that Bitcoin's raison d'etre was to be independent of governments, and I'd say that I'm pretty comfortable with the JP government going "you don't want to play in the financial industry sandbox? You don't get to come in when your sandbox is wet."

A FOOL AND HIS MONEY SHALL SOON PART (0)

Anonymous Coward | about 2 months ago | (#46367331)

Funny, in most countries it's concidered valueless! So stealing bitcoin probably isn't a crime... Suckers! I'll bet the anti-governernment supporters will run to the government and ask for help, watch! Lol...

How am I going to exchange my Magic cards now? (4, Funny)

jfengel (409917) | about 2 months ago | (#46367339)

Yeah, yeah, millions in bitcoins, but what about the Magic the Gathering Online Exchange? I keep all my wealth in Moxes. How will I exchange them now?

So, incompetence then? (1)

gstoddart (321705) | about 2 months ago | (#46367349)

So basically someone ginned up what they thought was a banking system only to discover they were grossly incompetent to run it and hadn't implemented anything resembling security?

Or did someone just manage to scam everyone out of bitcoins?

From the sounds of it someone just threw something together which was woefully insecure and allowed for a rather large scale theft.

Real banks have been at this for decades, and even they have problems. Trusting someone who just built one over the last year strikes me as a bad idea.

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