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Mt. Gox Questioned By Employees For At Least 2 Years Before Crisis

samzenpus posted about 4 months ago | from the I'm-not-sure-about-this dept.

Crime 134

Rambo Tribble (1273454) writes "Reuters reports that Mt. Gox employees began to question the handling of funds at least two years ago. Although only CEO Mark Karpeles had full access to financial records, a group of a half-dozen employees began to suspect client funds were being diverted to cover operating costs, which included Karpeles' toys, such as a 'racing version of the Honda Civic imported from Britain.' Employees confronted Karpeles in early 2012, only to be given vague assurances with a 'pay no attention to the man behind the curtain' ring. Unfortunately, since Mt. Gox was not regulated as a financial institution under Japanese law, it is unclear what recourse might be gained in pursuing this question."

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pierce the corporate veil (0)

Anonymous Coward | about 4 months ago | (#46616247)

Let's see how much Karpeles spent these past few years.

Re:pierce the corporate veil (0)

Anonymous Coward | about 4 months ago | (#46616377)

I wouldn't be the least bet surpised if the missing bitcoins work out to an exact figure of how much Karpeles has blown on expenditures over the past several years. He probably spent ever penny of his organization's profits on hookers and blow and then used the deposits to make up the difference.

Re:pierce the corporate veil (0)

cryptizard (2629853) | about 4 months ago | (#46616489)

Pretty unlikely that he spent over half a BILLION dollars without anyone noticing.

Re:pierce the corporate veil (0)

Anonymous Coward | about 4 months ago | (#46616651)

You've obviously never worked for a government contractor.

Or access to a Corporate Behemoth Sales Director Tier expenses account.

Remember, business to the sociopath (and the guys in control usually are) is just a game of numbers. Any feeling you have about wastage or corruption is just carefully calculated risk to the good player.

Re:pierce the corporate veil (1)

1s44c (552956) | about 4 months ago | (#46619285)

I really don't think MK is a sociopath. A sociopath would not damage their own company to the point of having to declare bankruptcy. Not when their own income depended on that company, not when that company had such high potential. Sociopaths are still pragmatic.

I think he was just utterly inept and far out of his depth. He literally didn't have a clue what he was doing. His stupidity and carelessness is no defense, he should face jailtime.

Re:pierce the corporate veil (1)

PopeRatzo (965947) | about 4 months ago | (#46616949)

Pretty unlikely that he spent over half a BILLION dollars without anyone noticing.

Depends on the quality of the hookers and blow.

Much less (2)

lindseyp (988332) | about 4 months ago | (#46618325)

If this was happening two years ago it's more likely he spent them when they were worth a fraction of their current value.

Re:pierce the corporate veil (2)

someone1234 (830754) | about 4 months ago | (#46618859)

Read the fucking summary: "a group of a half-dozen employees began to suspect client funds were being diverted to cover operating costs, which included Karpeles' toys"

Re:pierce the corporate veil (1)

1s44c (552956) | about 4 months ago | (#46619265)

Hookers, blow, and honda civics. Who the hell buys a Honda civic when they could buy anything? Who the hell gets one imported from the other side of the world?

If he was just a little bit competent he could have run a business that would have covered all his expenses legally and still run at a strong profit. The guy was well out of his depth. He needs to get jail time as a warning to others.

Re:pierce the corporate veil (2)

Alioth (221270) | about 4 months ago | (#46619333)

The European version of the Civic is actually a completely different car to the US version (you wouldn't recognise it as a Civic if you saw one and only know the US version). Even the low end current gen Civics in Europe have very sharp handling and are a lot of fun to drive. A European Civic with a big engine would be pretty awesome.

I wouldn't want to be Mark Karpeles at all. (4, Insightful)

caluml (551744) | about 4 months ago | (#46616253)

I wouldn't want to be Mark Karpeles at all. He's going to have annoyed a lot of dodgy characters who want their money back. I think he'll be looking over his shoulder for the rest of of his life.

Re:I wouldn't want to be Mark Karpeles at all. (0)

Anonymous Coward | about 4 months ago | (#46616305)

With all that money he can get a new identity. He can get plastic surgery to change his looks, and hire excellent security.

Re:I wouldn't want to be Mark Karpeles at all. (3, Insightful)

houstonbofh (602064) | about 4 months ago | (#46616491)

With all that money he can get a new identity. He can get plastic surgery to change his looks, and hire excellent security.

Assuming that he did not blow it all as he got it thinking the gravy train would never run out... And based on how things unfolded, I am guessing it went that way.

Re:I wouldn't want to be Mark Karpeles at all. (4, Insightful)

ObsessiveMathsFreak (773371) | about 4 months ago | (#46616395)

If Karpeles was smart enough, he would have been careful to avoid the accounts of Russian Oligarchs etc, and instead simply have stolen money from unconnected, largely unmonied Libertarians who have little to no legal recourse. Since there is no society, these types would have little means of coming back at him.

Re:I wouldn't want to be Mark Karpeles at all. (1)

caluml (551744) | about 4 months ago | (#46616441)

And how do you know where anonymous money has come from?

Re:I wouldn't want to be Mark Karpeles at all. (1)

exomondo (1725132) | about 4 months ago | (#46617111)

Why would it matter where it came from? The only thing that matters is who it belongs to, which is obviously the account holder.

Re:I wouldn't want to be Mark Karpeles at all. (0)

Anonymous Coward | about 4 months ago | (#46619099)

Maybe the utility bills and national IDs that were required as verification to use MtGox?

Re:I wouldn't want to be Mark Karpeles at all. (1, Troll)

khallow (566160) | about 4 months ago | (#46616615)

and instead simply have stolen money from unconnected, largely unmonied Libertarians

Stealing money from the "unmonied"? I see a huge, gaping flaw in your plan. Might as well steal half a billion from your pet cat. I'm sure he's good for it.

As was already noted, the problem isn't stealing from monied or unmonied, it's stealing from people with access to illegal recourse. Those people have means for getting back which are worse than anything "monied" people can do legally.

Since there is no society, these types would have little means of coming back at him.

And of course, we have to finish with a two minute hate. Libertarianism is basically about minimal government necessary for society not minimal society. But I guess you don't care.

your comment will make no sense (0, Troll)

raymorris (2726007) | about 4 months ago | (#46616673)

> Libertarianism is basically about minimal government necessary for society not minimal society. But I guess you don't care.

Or, not understand, and think your comment makes no sense. To these people, society IS government. When they say "we should help people who need it", that in no way suggests that they would EVER consider buying diapers and milk for the struggling young mother in line behind them. To them, "we" means "Washington", so "we should help" means "Washington power brokers should take your money and give it to whomever". They really and truly don't know any distinction between Washington bullying vs. ethical behavior. Personal responsibility does not exist, so society=ruling class, to them.

Re:your comment will make no sense (-1)

Anonymous Coward | about 4 months ago | (#46616807)

What did that poor strawman ever do to deserve such beating? You want to know why people distrust libertarians and their beliefs? Idiots like the guy above me.

Re:your comment will make no sense (1)

khallow (566160) | about 4 months ago | (#46616893)

Or, not understand, and think your comment makes no sense.

I have to agree. You don't seem to understand. Maybe you should fix that before doing that straw man thing again.

I guess this is the same sort of thing that is said about any political label. Maybe I should be pleased that people are discussing libertarianism with the same lack of seriousness that they'd give to any other major ideology.

Re:I wouldn't want to be Mark Karpeles at all. (1)

Anonymous Coward | about 4 months ago | (#46616715)

Libertarianism is about believing "initiation of force" means everything I don't like and that if only the society was different, whatever replace courts would always rule in my favor. Is putting a dam on your land to divert all the water of the river, thus depriving of water other lands "initiation of force"? The libertarian that built the dam will say "no, I do whatever I want on the land I own". The libertarian owning the land that does't receive water will say "the water belongs to me, therefore it is initiation of force". Whoever of the two has the more guns will just shoot the other, then claim the other initiated force against him (either by building the dam or trying to destroy it), then claim anyone trying to arrest him would be also initiating force and that he would therefore shot them too.

Re:I wouldn't want to be Mark Karpeles at all. (1)

khallow (566160) | about 4 months ago | (#46616839)

I see the two minute hate continues. It's amazing all the crazy shit that Emmanuel Goldstein believes.

Re: I wouldn't want to be Mark Karpeles at all. (1)

drougie (36782) | about 4 months ago | (#46618301)

And if you were smart enough, you would have used the subjunctive mood when phrasing a state of unreality.

A baseball bat is all you need (0)

Anonymous Coward | about 4 months ago | (#46619503)

Negreanu got goxed [youtube.com] <- As Negreanu says, I wouldn't mind it if someone takes a baseball bat and smashes mark karpeles in the nuts with it.

Re:I wouldn't want to be Mark Karpeles at all. (1)

Anonymous Coward | about 4 months ago | (#46616665)

What the hell is a "racing version" of a Honda Civic. Isn't a Civic supposed to be an economy car? Why wouldn't he just purchase a car that is built for racing?

Re: I wouldn't want to be Mark Karpeles at all. (1)

Anonymous Coward | about 4 months ago | (#46616883)

Not acquainted with the term "rice burner?" Souped up civics have been an institution amongst young Asian men for decades. The aftermarket high performance parts selection for Civics is massive.

Re: I wouldn't want to be Mark Karpeles at all. (1)

noh8rz10 (2716597) | about 4 months ago | (#46617329)

Term is "rice rocket"

Re: I wouldn't want to be Mark Karpeles at all. (0)

Anonymous Coward | about 4 months ago | (#46617335)

Not acquainted with the term "rice burner?" Souped up civics have been an institution amongst young Asian men for decades. The aftermarket high performance parts selection for Civics is massive.

You haven't really experienced life until you've laughed your butt off at a Honda Civic on the street with low rumbling loud exhaust (and large chrome exhaust pipes), a hood scoop (with probably nothing under it), spoiler, and flames painted on the hood and sides, while music blasts out of the tinted windows... it's the most hilarious site you'll ever see, just makes you go "oooh, you're soooo coool!" LOL

Underbody LEDs ... (4, Funny)

perpenso (1613749) | about 4 months ago | (#46617527)

What the hell is a "racing version" of a Honda Civic.

For many, one with underbody LEDs. :-)

Re: I wouldn't want to be Mark Karpeles at all. (0)

Anonymous Coward | about 4 months ago | (#46617531)

In Japan they turn civics into "race cars" because of the extreamly high taxes on V8 imports, it's the best they can do pretty much. Why is people loosing money on bitcoin a suprise or newsworthy, seem the logical outcome to me.

Re:I wouldn't want to be Mark Karpeles at all. (1)

gl4ss (559668) | about 4 months ago | (#46618259)

dunno... a racing version is something they use to race in some gti class or something like that.

but you know, put in a monkey cage, take out most of the interior, put in a tuned engine and all that stuff.

(I think you can buy a type-r street gti version in japan anyways)

Re:I wouldn't want to be Mark Karpeles at all. (0)

Anonymous Coward | about 4 months ago | (#46619061)

It could be a Type-R, which is just a higher performance Civic that might not be sold where you live.

Alternatively it could be a Civic modified for touring car racing.

For example:
http://en.wikipedia.org/wiki/File:Tiago_Monteiro_2012_WTCC_Race_of_Japan_(Qualify_2).jpg

Re:I wouldn't want to be Mark Karpeles at all. (1)

blackicye (760472) | about 4 months ago | (#46618635)

I wouldn't want to be Mark Karpeles at all. He's going to have annoyed a lot of dodgy characters who want their money back. I think he'll be looking over his shoulder for the rest of of his life.

At least he can rest easy knowing that they no longer have bitcoins to hire hitmen with. ;)

bitcoin (0)

superwiz (655733) | about 4 months ago | (#46616283)

Technically speaking, bitcoins are not financial instruments. Producing a bitcoin is effectively a gamble. So entirely bitcoin system is a gambling institution. And exchanges act as token brokers. In gambling terms, they are the house. I don't think casinos are treated as financial institutions though. And for anyone actually looking to regulate bitcoins, casinos are probably a better model. People can exchange chips among themselves anonymously. But if they want to exchange them at an "established" location, then they have to do it through a cashier acting as a broker. This is what exchanges are.

Re:bitcoin (1)

the simurgh (1327825) | about 4 months ago | (#46616319)

this is good since a lot of countries have laws prevent casinos and the like from dipping into the till. i wonder if us customers can sue and use these laws.

Re:bitcoin (2)

Frosty Piss (770223) | about 4 months ago | (#46616339)

i wonder if us customers can sue and use these laws.

Remember, though, the IRS considers Bitcoin "property" not "money".

Re:bitcoin (3, Insightful)

Nidi62 (1525137) | about 4 months ago | (#46616425)

i wonder if us customers can sue and use these laws.

Remember, though, the IRS considers Bitcoin "property" not "money".

So sue/press charges on Mt. Gox for loss/theft of property? If bitcoins are property, then an exchange would be like a storage place, or maybe a consignment shop. If you put your physical items in any of those places and then one day the owner says "oops, your stuff is gone, sorry"(especially due to the actions/fault of the owner), you would be able to go after them for the loss of your assets. It should be the same case with bitcoins.

Re:bitcoin (1)

Oligonicella (659917) | about 4 months ago | (#46616669)

Good luck proving your bitcoins. Even with storage facilities you have to have some form of value proof.

IRS notice not applicable ... (1)

perpenso (1613749) | about 4 months ago | (#46617541)

i wonder if us customers can sue and use these laws.

Remember, though, the IRS considers Bitcoin "property" not "money".

So sue/press charges on Mt. Gox for loss/theft of property?

US IRS notices don't have much weight in Japan. :-)

Re:IRS notice not applicable ... (1)

Frosty Piss (770223) | about 4 months ago | (#46617989)

US IRS notices don't have much weight in Japan. :-)

That Japanese government may very well have the same issues with Bitcoin that the US government does. In fact, mast governments will, because they are looking for ways to control and tax it.

So, thanks for the "simile face", but just because Japan is not the US does not mean everything is hunky dory with Bitcoin in Japan.

Re:IRS notice not applicable ... (1)

styrotech (136124) | about 4 months ago | (#46618117)

So, thanks for the "simile face", but just because Japan is not the US does not mean everything is hunky dory with Bitcoin in Japan.

That wasn't a simile face. It was like a simile face though.

Same thing (1)

lindseyp (988332) | about 4 months ago | (#46618335)

Japan also considers bitcoin a commodity.

Re:bitcoin (1)

Anonymous Coward | about 4 months ago | (#46616347)

It appears you don't know how bitcoins or casinos work.

Re:bitcoin (2)

kelemvor4 (1980226) | about 4 months ago | (#46616711)

Technically speaking, bitcoins are not financial instruments. Producing a bitcoin is effectively a gamble. So entirely bitcoin system is a gambling institution. And exchanges act as token brokers. In gambling terms, they are the house. I don't think casinos are treated as financial institutions though. And for anyone actually looking to regulate bitcoins, casinos are probably a better model. People can exchange chips among themselves anonymously. But if they want to exchange them at an "established" location, then they have to do it through a cashier acting as a broker. This is what exchanges are.

Except that they have "accounts" where they hold your money and do whatever they want with it in the meantime. It makes them much more like banks. Of course they go to great lengths to dispel that, since it would mean regulation and oversight.

Paypal (0)

Anonymous Coward | about 4 months ago | (#46616855)

Technically speaking, bitcoins are not financial instruments. Producing a bitcoin is effectively a gamble. So entirely bitcoin system is a gambling institution. And exchanges act as token brokers. In gambling terms, they are the house. I don't think casinos are treated as financial institutions though. And for anyone actually looking to regulate bitcoins, casinos are probably a better model. People can exchange chips among themselves anonymously. But if they want to exchange them at an "established" location, then they have to do it through a cashier acting as a broker. This is what exchanges are.

Except that they have "accounts" where they hold your money and do whatever they want with it in the meantime. It makes them much more like banks. Of course they go to great lengths to dispel that, since it would mean regulation and oversight.

Sounds an awful lot like Paypal...

Re:bitcoin (1)

superwiz (655733) | about 4 months ago | (#46618427)

They same is true of any casino which lets you deposit money with them while providing you with a dealer to arbiter your poker games. You can use the deposited money to buy chips in the casino. And then you can sit at a table and have a casino-regulated gambling session with other players. It's not quite the same, but the fact that mining of bitcoins is largely a game of luck, means that the whole system is based on a very sophisticated gambling scenario. Bitcoins have not inherent value other than to indicate who won and who lost in the gamble. That proceeds of the gamble can be exchanged for real-world tangibles, but the same is true of casino chips. It's not exactly like poker. But poker is not the only game casinos offer. They offer many, sometimes newly introduced, games. This seems to operate like one of them.

Re:bitcoin (1)

sjames (1099) | about 4 months ago | (#46616863)

OK, now tell us how they differ :-)

Re:bitcoin (1)

superwiz (655733) | about 4 months ago | (#46618435)

What? Casinos? How they offer from tangible exchanges? Any paper you buy on an exchange comes with some legal rights. Even stock gives you the legal right to vote in company board elections. Commodity contracts give obvious legal rights. Bonds give you a right to demand payment from a creditor, etc. Buying a bitcoin does not give you any legal right, so I still don't think it is appropriate to deem it to be a property. I suppose if you had a system for reselling casino winnings, then bitcoins would be identical (rather than similar) to it. But casinos do run different (sometime odd) games. This is just another gambling game.

Re:bitcoin (1)

sjames (1099) | about 4 months ago | (#46618509)

I was making a commentary about all the toxic paper passed off as financial instruments in the banking crisis and in what way it differs from betting on musical chairs.

Now we'll find out something (5, Insightful)

Animats (122034) | about 4 months ago | (#46616313)

Now that ex-employees are talking to the press and the cops, we'll find out what was going on.

The Reuters article makes it clear that Karpeles had exclusive personal control over Mt. Gox's cash. That probably means he'll be the one going to jail. I've been writing for months (ever since Mt. Gox suspended US dollar withdrawals last summer) that Mt. Gox was either incompetent, broke, or crooked. Now it looks like all of the above.

Why would Karpeles import a Honda Accord R from the UK to Japan? They're made in Japan.

Easy (-1)

ArchieBunker (132337) | about 4 months ago | (#46616331)

It was pretty easy to figure out what was going on. It was a big Ponzi scheme. He took all the money and hid it somewhere. Now blame it going missing on evil hackers and live off the hidden stash.

Re: Easy (5, Informative)

O('_')O_Bush (1162487) | about 4 months ago | (#46616399)

...? That isn't what a Ponzi scheme is. That is just fraud.

Re: Easy (1)

Anonymous Coward | about 4 months ago | (#46616687)

Taking most of the revenue for yourself while using the money of later investors to keep earlier investors sweet = Ponzi, bro.

Re: Easy (0)

Anonymous Coward | about 4 months ago | (#46617141)

Taking most of the revenue for yourself while using the money of later investors to keep earlier investors sweet = Ponzi, bro.

Your REALLY need to read what happened.

You should also probably look up Ponzi's as well, it is not some generic term you can trough at any sort of fraud it is a specific type of fraud that does not apply here (MtGOX never returned a percentage per day/week/month/year as interest).

Re: Easy (0)

Anonymous Coward | about 4 months ago | (#46617571)

The basic Ponzi scheme involves a claim that you have a new way of making money (investments, floor cleaner, diet aids) that nobody else has thought of before

The first people in get their return based on the money that the second set of people bring in

This creates a sensation and a larger third set of people get in

The first and second sets of people get their return based on the money that the third set of people bring in

This cycle continues until the upper tiers take their money out and the whole thing collapses when there is no additional set of people to bring new money in

There is usually some legal action and furor over where the money all went, but billions of dollars can (and have) evaporated in the blink of an eye

walks like a duck, quacks like a duck, it is probably a duck

Re: Easy (0)

Anonymous Coward | about 4 months ago | (#46617775)

The basic Ponzi scheme involves a claim that you have a new way of making money (investments, floor cleaner, diet aids) that nobody else has thought of before

Agreed

The first people in get their return based on the money that the second set of people bring in

Yep

This creates a sensation and a larger third set of people get in

Right

The first and second sets of people get their return based on the money that the third set of people bring in

OK

This cycle continues until the upper tiers take their money out and the whole thing collapses when there is no additional set of people to bring new money in

There is usually some legal action and furor over where the money all went, but billions of dollars can (and have) evaporated in the blink of an eye

Absolutely

walks like a duck, quacks like a duck, it is probably a duck

What do ducks have to do with it? You have described how a Ponzi works, OK you seem to know but applying it to a duck is meaningless you need to apply it to MtGOX (in this instance).

MtGOX took off with people property that they had been entrusted with, that is fraud.

MtGOX never said they will make money for them (bitcoin never said it either... but and idea never actually says anything). There were no first investors, second invests or even last investors, no potential returns nothing.

MtGOX took off with everyone's property, plain and simple.

Re: Easy (0)

Anonymous Coward | about 4 months ago | (#46617909)

mt gox does not so much describe 'Ponzi' as much as either
A. a mechanism to remove value from the Ponzi scheme in advance of its demise (it is very difficult to pull value out in open view, it tends to depress the market)
B. An overall weakness in the story behind the Ponzi scheme that could throw it into a premature tailspin

So, the Ponzi-like nature is more akin to that of bitcoin itself, that is the claim that you have a new way of making money and a rising popularity in the method that generates large sums of money as more people try to jump in on it. Of course the last thing that a Ponzi scheme would want would be to be labeled as such

Of course, the comparison comes up with ponzi schemes to the Stock Market and how popularity makes things seem like they have more value than they do (dotcom boom anybody?). Of course the stock markets have hideous amounts of regulation on them, thousands of SEC lawyers, limits to insider trading and even the amounts of stock that large holders can sell at any time. All of these things have come along over the decades to make the Sock Market less Ponzi-prone and more legitimate

bitcoin lacks any of that hideous regulation, and in fact attracts people who would regale at the lack of regulation, and as such is far more exposed to getting pumped in a boom and bust that leaves most of the people involved holding very little value. I'll grant you that the story has more than a few twists in it, and may even be writing its own book, scams make for compelling literature

Re: Easy (0)

Anonymous Coward | about 4 months ago | (#46619113)

An asset bubble isn't a Ponzi scheme either, you goalpost moving fool.

Re: Easy (1)

gl4ss (559668) | about 4 months ago | (#46619067)

that would imply that he was inflating market value of bitcoins just to get more people to buy bitcoins... which doesn't really sound plausible with the money he had.

Re: Easy (1)

complete loony (663508) | about 4 months ago | (#46617071)

That's exactly what a Ponzi scheme is. Fraud, claiming that you are making money when you aren't, and paying out people from the money contributed by new investors.

Re: Easy (1)

ASDFnz (472824) | about 4 months ago | (#46617157)

That's exactly what a Ponzi scheme is. Fraud, claiming that you are making money when you aren't, and paying out people from the money contributed by new investors.

As I have mentioned elsewhere.

You should also probably look up Ponzi's as well, it is not some generic term you can trough at any sort of fraud. It is a specific type of fraud that does not apply here (MtGOX never returned a percentage per day/week/month/year as interest).

Re: Easy (1)

complete loony (663508) | about 4 months ago | (#46617427)

If you took your balance out of MtGOX, sure. But how many people had a cash or bitcoin balance held by them that didn't actually exist? A balance they now cannot recover? MtGOX is certainly negligent, but if they suspected that the cash didn't exist and ignored it while continuing to pay out, that's fraud and practically a Ponzi scheme.

Re: Easy (1)

ASDFnz (472824) | about 4 months ago | (#46617789)

that's fraud and practically a Ponzi scheme.

Yep, it is total fraud, but it is not "practically a Ponzi scheme", it is just plain old fraud.

Re: Easy (0)

Anonymous Coward | about 4 months ago | (#46618071)

A Ponzi scheme is a fraudulent investment operation where the operator, an individual or organization, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned by the operator.

https://en.wikipedia.org/wiki/Ponzi_scheme

If he has taking money from investors, and paying his debts with 'new money' it's a Ponzi scheme, even if it was BTCs instead of $s.

Re: Easy (0)

Anonymous Coward | about 4 months ago | (#46618537)

You guys are all idiots. Just stop arguring, the dude is right. It is in no way a ponzi scheme. Mt gox wasnt taking "ivestors" as clients, they were simply brokering a comoddity. Just admit you used a word without fully understanding what it meant. Sheesh.

Re: Easy (0)

Anonymous Coward | about 4 months ago | (#46617167)

That's exactly what a Ponzi scheme is. Fraud, claiming that you are making money when you aren't, and paying out people from the money contributed by new investors.

These people aren't "investors" and there is no concept of "new investors", its a bank where people transfer money in and out all the time.

Re: Easy (0)

Anonymous Coward | about 4 months ago | (#46617287)

That's exactly what embezzlement is. Stealing money entrusted to you.

FTFY. I don't remember any exchanges (Bitcoin or otherwise) promising to "make money" for their customers.

This is plain old embezzlement - steal money, cook the books and hope to run away before too many people ask for their deposits back. Karpeles failed the last step.

Exchanges with interest (1)

witherstaff (713820) | about 4 months ago | (#46617663)

there are a number of exchanges that pay interest on your holdings on the exchange. They take a percentage of fees the exchange earns and give it to people with coins held there. The rationale is they want your coins sitting on the exchange as it'll encourage you to trade only on that exchange. One exchange, mcxnow, even posts a current interest rate based on the last 6 hour of fees.

Re:Exchanges with interest (0)

Anonymous Coward | about 4 months ago | (#46617891)

Now _that_ is suspicious, especially given that their FAQ explicitly says "No, we're not investing anywhere, we're just giving you free money!"

Why would they want all that money simply sitting in their coffers? It's not like they need huge reserve against a bank run (especially when they're saying they're not using those funds anyways)

PS: I like how their foremost feature is listed as "mcxNOW is the worlds fastest digital exchange coded securely in low level C++", "Secure C++ trading engine:
A well designed binary trading engine coded in the same programming language used for the New York Stock Exchange." Really inspires trust. I mean, it's used for the NYSE!

Re: Easy (1)

rahvin112 (446269) | about 4 months ago | (#46617533)

Securities fraud to be exact. When they opened a US branch they opened themselves to US law. The IRS just ruled that bitcoins are property not currency. As a result they fall under US securities laws. And amazingly the US fed's have been investigating them for a while.

The SEC is going to eat the CEO for lunch, just wait. It's going to take a little while to build the case depending on when they started the investigation but I'd wager within 2-3 years he's going to be charged with violations of US securities laws. I have no doubt whatsoever that he'll be convicted and go to jail for around a decade. That and the government will seize all his assets.

Re:Now we'll find out something (4, Informative)

afgam28 (48611) | about 4 months ago | (#46616381)

He imported a Civic, not an Accord. There are two cars called the "Civic Type R", one of which is made in Japan (and also sold in the US) and the other is made in England (and sold in Europe). The former looks like this:

http://www.allvehicles.co.uk/c... [allvehicles.co.uk]

The latter looks like this:

http://upload.wikimedia.org/wi... [wikimedia.org]

Re:Now we'll find out something (1)

Charliemopps (1157495) | about 4 months ago | (#46616587)

You think a guy steeling that kind of cash would have gotten something other than a Honda Civic from England. He either has bad taste in cars or he wasn't squandering money quite as lavishly as this article leads you to believe.

Re:Now we'll find out something (0)

Anonymous Coward | about 4 months ago | (#46616681)

You think a guy steeling that kind of cash would have gotten something other than a Honda Civic from England. He either has bad taste in cars or he wasn't squandering money quite as lavishly as this article leads you to believe.

Yeah, I can't imagine he was doing much ballin' driving around in a Honda Civic. Maybe he was trying to pick up some suburban moms.

Re:Now we'll find out something (1)

wiredlogic (135348) | about 4 months ago | (#46617259)

This is in Japan. You can't really get supercars there so you have to settle for more modest bling.

Re:Now we'll find out something (0)

Anonymous Coward | about 4 months ago | (#46617869)

Say what? Go walk around the Roppongi Hills area in Tokyo and tell me that you can't get supercars there...

Re:Now we'll find out something (0)

Anonymous Coward | about 4 months ago | (#46618415)

Cornes Motors [cornesmotor.com]

Re:Now we'll find out something (1)

kelemvor4 (1980226) | about 4 months ago | (#46616737)

You think a guy steeling that kind of cash would have gotten something other than a Honda Civic from England. He either has bad taste in cars or he wasn't squandering money quite as lavishly as this article leads you to believe.

I couldn't agree more. Unless he was really trying to impress a single mother of two in Japan.

Re:Now we'll find out something (0)

Anonymous Coward | about 4 months ago | (#46618317)

Honda Civic production for Japan domestic market stopped in 2010.

Re:Now we'll find out something (2)

Alioth (221270) | about 4 months ago | (#46619375)

The European version of the Civic (made in the UK) is actually a very fun car to drive, even the low end models have excellent handling and are fun to thrash on a curvy road. I have to imagine the Type R is pretty good fun to drive, and while they might not have the bling factor of a Ferrarri, they have Honda reliability not the cantankerous and impractical nature of an Italian supercar. There are many worse choices he could have made.

Re:Now we'll find out something (0)

Anonymous Coward | about 4 months ago | (#46616991)

The Civic Type R has never been sold in the United States. Only two Honda (Acura) products with the Type-R badging have graced our shores, the Acura Integra and NSX.

Re:Now we'll find out something (1)

afgam28 (48611) | about 4 months ago | (#46617093)

Ah, you're right. I got it mixed up with the "Civic Si" which is a similar but slightly different car.

Re:Now we'll find out something (1)

Paradise Pete (33184) | about 4 months ago | (#46619045)

similar but slightly different

Yes, that's what similar means.

Re:Now we'll find out something (0)

Anonymous Coward | about 4 months ago | (#46617751)

I am not sure what the import fees and such would cost. But at the same time a civic hardly seems like an extravagant vehicle. If he would have bought a ferrari it would be a bit more telling.

Re:Now we'll find out something (1)

houghi (78078) | about 4 months ago | (#46616745)

Why would Karpeles import a Honda Accord R from the UK to Japan? They're made in Japan.

Availability?

Re:Now we'll find out something (1)

Alioth (221270) | about 4 months ago | (#46619355)

Well, the article said it was a Civic. The Honda Civic is made in Swindon (southern UK) and presumably he wanted the version of the Civic that's not manufactured in Japan (the European Civic is vastly different to the US one for instance - might be the same case with the Japanese version).

What's "2-years"? (-1)

Anonymous Coward | about 4 months ago | (#46616453)

What's "2-years"?

Screw Mt.Gox (1)

ArcadeMan (2766669) | about 4 months ago | (#46616465)

Anyone knows what really happened with CoinEx.pw?

Re:Screw Mt.Gox (0)

Anonymous Coward | about 4 months ago | (#46616515)

Seems like there's an exchange blow up every week: Cryptoave.com, Mcxnow.com, Cryptorush.com and now Coinex.pw. On the plus side, once all these exchanges run by incompetent amateurs and teens die off, maybe some professional level code will get written.

Re:Screw Mt.Gox (0, Insightful)

Anonymous Coward | about 4 months ago | (#46616581)

What do you think happened moron? They took your money and ran leaving you holding the bag. You got fucked and you're on Slashdot asking strangers to tell you comforting lies to make the extreme discomfort of this realization go away. When Mt. Gox fell, the tide went out on all the other exchanges as people withdrew all their coins. Now we're seeing who was swimming naked.

Just like a run on a bank, the first people to make withdrawals got money. Once the coffers were empty, people who were slow on the uptake got left holding the bag.

If you're one of those people, you are probably the type of person that hops from one HYIP to the next, losing their shirt at every turn.

(If you read Rich Dad Poor Dad, lost your shirt on Real Estate/Stock Market in 2007-2008, lost your shirt on precious metals in 2011-2012, and lost your shirt on Crypto-currencies in 2013-2014 I'm probably talking to you. No, Iraqi Dinar will never be worth more than you paid for them, you missed the boat on Dogecoin, and now that KNC Miner is releasing a Scrypt Asic: your Scypt-based altcoins are going to get clobbered as the miners abandon them en masse.)

There are "fish" and "sharks". You are a fish. Do yourself a favor and keep your money in low risk investments like FDIC backed savings accounts.

Re:Screw Mt.Gox (0)

ArcadeMan (2766669) | about 4 months ago | (#46616695)

Who said I had any money there? Unless you think 1000 Doge is a huge fortune.

Pro tip (5, Insightful)

glasshole (3569269) | about 4 months ago | (#46616497)

Never ever work for a company where only the CEO has access to the financial records.

Wrong on many levels (3, Informative)

Dan East (318230) | about 4 months ago | (#46616749)

You know things are really screwy when Japanese cars are being imported from Britain to Japan.

Re:Wrong on many levels (0)

Anonymous Coward | about 4 months ago | (#46616847)

Explanation [slashdot.org] .

Re:Wrong on many levels (1)

Anonymous Coward | about 4 months ago | (#46618687)

It's a car built in Britain that is exported to Japan.

http://en.wikipedia.org/wiki/Honda_Civic_Type_R#FN2_chassis_.28European_version.29 [wikipedia.org]

Production of the current generation of the Civic Type R hot hatch for the European market finished in October 2010.
Honda’s Swindon plant will continue to build the car for the Australian markets. It is also exported to Japan and marketed as Civic Type-R EURO in limited edition in fall 2010, following a successful run in November 2009.

The Honda Civic Type R Euro has been a solid hit in Japan. The UK-built hatchback packs 201 horsepower, love-it-or-leave-it styling and a suspension that has been honed on the lunging tarmac of Europe. No, it may not be as fast as its predecessors, but that hasn't stopped Japanese buyers from snapping them up in troves. Honda says that since the car went on sale in November, the company has sold 1,850 units on its home turf.

This is not unheard of even for GM: Pontiac GTO, Pontiac G8 GXP, Chevy SS were all built in Australia.

No problem (0, Funny)

Anonymous Coward | about 4 months ago | (#46616823)

It'll fix itself because the fairy hand of the market provide perfect knowledge to the worthy. The unworthy ones got what they deserved by not seeing in their crystal ball that Gox was an unsafe place to put their bitcoins. Soon, the unworthy ones won't have any more money to lose and only the worthy ones (the ones with irresistible grace) will have bitcoins and since the worthy ones never make any mistakes, only honest bitcoins exchange will remain. Not that stealing unworthy ones that lack irresistible grace is dishonest anyway, after all people without the irresistible grace are not really people.

Reminds me of Charles Manson's "Garbage Dump" song (0)

Anonymous Coward | about 4 months ago | (#46617017)

You can feed the world with a garbage dump. That sums it up in one big lump!

Wow. Still not sure how they spent it all. (1)

beltsbear (2489652) | about 4 months ago | (#46617353)

MTGOX charged 1% fees (.5% from both sides of a trade) and had volumes in the 50 million range for many months. They often had earned a profit in the range of 500,000 every month. That should be close to the amount they were spending on all of this junk plus employees. I still do not see where all of the dough went even with the extravagances shown.

It has also been shown that they did not have large amounts of transaction malleability theft as well. Something else happened. Like the owner keeping the coins.

Another failure in the pothead money market (0)

Anonymous Coward | about 4 months ago | (#46617631)

Guess what, drug addicts can't handle money. No surprise.

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