back to article MtGox boss vows to keep going despite $429m Bitcoin 'theft'

MtGox CEO Mark Karpeles has broken his silence to insist he has not "given up" on the failed Bitcoin exchange. Speaking as Japanese authorities launched a full investigation into the collapse, Karpeles said walking away “is not a part of how I usually do things”. However, although the CEO indicated he was still at home in …

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  1. Mystic Megabyte
    Trollface

    dum di-di dum dum

    I'm sure that I saw a hollowed out volcanic island for sale off the coast of Japan recently.

    Where's a white cat icon when you need one?

    1. Anonymous Coward
      Anonymous Coward

      Re: dum di-di dum dum

      How can anyone loose 750,000 of anything for 'years' and not notice?! Especially when it is effectively £500 notes. Talk about shoddy accounting.

      1. jai

        Re: dum di-di dum dum

        well the system is designed to almost anonymise the transactions. i imagine that makes it rather difficult to reconcile, and even worse to audit after the fact.

        but yes, you're right, they should have built the system to guard against this possibility. if they'd set it up correctly to start with, then they probably wouldn't have lost these amounts over the time. But to go in now and fix it is likely going to be a massive pain in the neck. glad it's not my job

        1. Anonymous Coward
          Anonymous Coward

          Re: dum di-di dum dum

          Rubbish, the entire blockchain is public. Gox knows which addresses they have the private keys for. They know the total number of bitcoins in their custody.

          If Gox had shown even the remotest shred of competence, they would have noticed that at some point over the years the theft occurred, their bitcoin balance was diverging from the total bitcoin liabilities of the exchange (e.g. they were operating a fractional reserve).

          That they didn't notice this is criminally negligent. One of the -first questions- any complaince officer there should have asked was "Ok, so apparently we have 750k btc deposited. Do we actually own those bitcoins, and where are they?"

          Utter fucktards.

          1. Version 1.0 Silver badge

            Re: dum di-di dum dum

            "Ok, so apparently we have 750k btc deposited. Do we actually own those bitcoins, and where are they?"

            That question depends on the accountants - and accountants are notorious for not asking questions that might embarrass the person paying them.

          2. Tim 69

            Re: dum di-di dum dum

            Compliance officer you say? Why would they possibly want/need one of those? It's not as though they are a regulated entity like a bank or recognised investment exchange.... Oh... Wait a minute....!

          3. lotan

            Re: dum di-di dum dum

            If they were half the programmers they should have been, they would have wrote software that was auditing the entire flow of money/coins in & out. Checking the balance sheets vs outgoing and making sure everything was sound. Immediately throwing a switch if something wasn't adding up right. I guess we'll just write software that ships payments on repeat until we see the confirmation. That sounds like a great plan.

        2. razorfishsl

          admin@razorfishsolutions.com.hk

          ER No……..

          Simply put, he is 'claiming' that a shit load of money has gone missing

          All BTC into and out of gox is tracked by the block-chain, so… if he is calming that the money was taken out.. let's see the relevant transactions and addresses.

          There can be NO valid transaction unless it appears in the block chain.

          let us also be clear that this is gox'es fault because transactions are ONLY valid if they appear in the block chain, the point has clearly been made many times that certain transaction fields can be altered prior to that to assist in the block being closed out and entering the block chain.

      2. raving angry loony

        Re: dum di-di dum dum

        quote: " Talk about shoddy accounting."

        Quite the contrary. It was a brilliant bit of creatively criminal accounting. Do you know how hard it is to hide the loss of 750,000 of anything in a budget report in such a way that nobody notices?

        1. Anonymous Coward
          Anonymous Coward

          Re: dum di-di dum dum

          " Do you know how hard it is to hide the loss of 750,000 of anything in a budget report in such a way that nobody notices?"

          Just get it marked by the accountants as an "exceptional item", and everybody in the world pretends it is invisible. Which probably explains that "exceptional expenditures/losses" probably outnumber "exceptional gains" by about 900 to 1.

      3. GBE

        Re: dum di-di dum dum

        "How can anyone loose 750,000 of anything for 'years' and not notice?! Especially when it is effectively £500 notes. Talk about shoddy accounting."

        This is a web site set up to allow nerds to trade "Magic The

        Gathering" cards with each other.

        Then somebody with presumably no background in banking, accounting, or finance decides to change it into an international bank. [Hey, how hard can it be to run a bank based on an untested currency model implemented in untested software?]

        Add hundreds of millions in drug money; mix well; wait a few years.

        Hilarity ensues.

        1. Ian 55

          Re: dum di-di dum dum

          This is the exchange that started life having people's passwords in clear text in the URL.

          I suspect security and proper accounting were lower down his list of concerns than what colour toilet paper to have in the office toilets.

        2. Anonymous Coward
          Thumb Up

          Re: dum di-di dum dum

          @ GBE

          I think you just won the internet, at least as far as this subject goes.

      4. Anonymous Coward
        Anonymous Coward

        Re: dum di-di dum dum

        *lose!!!!!

    2. asdf
      Joke

      Re: dum di-di dum dum

      >dum di-di dum dum

      What does this have to do with the Barney Miller (or I guess Dragnet if want to go even older school) theme song? (lol google it young uns)

  2. Anonymous Coward
    Anonymous Coward

    Death threats - WTF?

    Without belittling the lossess people have suffered, like other corporate investors who lose their money because of somebody elses cock up, you just have to take this on the chin.

    Death threats etc is not how this works - it is business unfortunately.

    1. Mephistro

      Re: Death threats - WTF?

      "Death threats etc is not how this works - it is business unfortunately."

      The problem with that is that Mt.Gox has lots of contacts with a specific subset of business for which death threats and just death are common tools, and no, I'm not talking about defence contractors or insurance companies. ;-)

      Upvoted your post anyway because speaking in more general terms I think you're right.

    2. Phil W

      Re: Death threats - WTF?

      Indeed. Death threats, unless you have thoroughly hidden yourself online, may even result in you ending up facing criminal charges and imprisoned yourself.

      The authorities may be investigating Mt Gox but I suspect there is very little they can do about the theft of an unregulated crypto currency that no government even recognises as a real currency. Perhaps a prosecution for data theft?

      1. Anonymous Coward 101

        Re: Death threats - WTF?

        "The authorities may be investigating Mt Gox but I suspect there is very little they can do about the theft of an unregulated crypto currency that no government even recognises as a real currency. Perhaps a prosecution for data theft?"

        Why would any self respecting techno-anarchist need or want help from the so-called 'authorities'? They are probably writing nano-viruses to hack the mainframe of the thieves as we speak.

      2. Tom 13

        Re: Perhaps a prosecution for data theft?

        You should still be able to get them on property theft. Even if it isn't currency it is something they owned.

        Of course that presents a different issue to the Bitcoin fanatics. The whole point of Bitcoin is to escape government involvement. If the government can track and prosecute for theft of Bitcoin, they can do a whole lot more to it as well.

    3. sisk

      Re: Death threats - WTF?

      I say LET'S GET HIM...

      ....a hairless cat.

    4. Psyx

      Re: Death threats - WTF?

      "Death threats etc is not how this works - it is business unfortunately."

      True, but Bitcoin users feature a high proportion of criminals and people who don't understand how business really works.

      That said, sometimes I'd like to see company directors taking a physical kicking in the wake of folding their company with a bunch of debts and walking away scott-free after carefully ensuring their Aston and holiday home is perfectly safe!

      1. Ian 55

        Re: Death threats - WTF?

        "That said, sometimes I'd like to see company directors taking a physical kicking in the wake of folding their company with a bunch of debts and walking away scott-free after carefully ensuring their Aston and holiday home is perfectly safe!"

        In the 19th Century, after a series of insurance companies failed, Punch magazine suggested that hanging the directors of the next one to collapse would ensure a bit more thought about managing the companies well.

        1. Psyx

          Re: Death threats - WTF?

          Quite.

          The only good thing to ever happen in North Korea and idea worth exporting was when the executed the minister who attempted to reform the currency and failed.

    5. Anonymous Coward
      Anonymous Coward

      Re: Death threats - WTF?

      You're forgetting, it's a currency for criminals and geeks. Criminals are nasty and geeks are often hard knocks when they're sat behind their computer.

    6. Tom 13

      Re: it is business unfortunately.

      And when you deal with rational investors with fully disclosed business details you don't get that.

      But this was neither rational investors nor fully disclosed business details.

      The non-criminal "investors" are mostly from the kook conspiracy fringe. Their rage is barely contained at the best of times and for them death threats over the internet are a sort of cathartic release. The business details weren't fully disclosed because the whole MtGox thing was catching lighting in a pan. The people starting it didn't have the first clue and were quickly in way over their heads. But hey it was all working and they were raking in the dosh, so they went all Alfred E Neuman. Besides, a significant part of their business was from people who don't exactly want fully disclosed business details, cause that might alert Interpol et al. to what's up.

  3. Anonymous Coward
    Anonymous Coward

    It was Alex Salmond, it's how he plans to fund an independent Scotland.

    So a bit like the rest of his plans the funding is built on a house of cards ready to collapse at any time.

    1. Anonymous Coward
      Anonymous Coward

      I for one welcome our new overlord that will soon be president of the Republic of Scotistan....

    2. smudge
      Facepalm

      <sigh>

      I've been thinking lately that we ought to have a variant of Godwin's Law, to cover the fact that, sooner or later, every online discussion nowadays seems to include a sarky comment about Salmond specifically or Scottish independence in general.

      First names that came to mind were North Berwick Law and Denis Law, but I suggest Rubi's Law, because that's an area of Aberdeen most famous for a f--king great hole in the ground.

    3. Anonymous Coward
      Anonymous Coward

      Twitcoin? mind you, Twitter would stop that.

      1. Anonymous Coward
        Anonymous Coward

        ShitCoin surely?

    4. Phil W

      Bitcoin may be a house of cards, but in my opinion it may be a marginally better basis for a nation's financial plans than a currency union with a country who has said they won't have a currency union with you....

      1. Richard 12 Silver badge

        As Salmond himself said,

        GBP is an internationally recognised currency and anybody can use it for their transactions.

        An independent Scotland is welcome to use it if they want to.

        If he thinks he can have any control over it then he's sadly mistaken, because that's simply not going to happen.

        1. Anonymous Coward
          Anonymous Coward

          Re: As Salmond himself said,

          "If he thinks he can have any control over it then he's sadly mistaken, because that's simply not going to happen."

          Yeah, not even England has control over it. That was ceded to the banksters ages ago.

        2. Velv
          Boffin

          Re: As Salmond himself said,

          @Richard 12 - Yes it's widely banded around that "they can't stop us using Sterling even if we have no currency union". Sounds great to the pro-yes supporters in rallying support.

          Well, in theory at least. In practical terms using any foreign currency without a currency union would be fraught with difficulties.

          On a day to day basis the pound in the pocket would continue without any problems. However all major currencies have controls in place on larger transaction to limit fraud and money laundering (£10,000 in the UK) and this then places controls in the hands of the UK treasury for the legitimate routing of the (electronic) transaction. These are enforced through SWIFT in Europe, so you can't escape the electronic controls. Transactions would therefore require routing through an rUK regulated bank, which would introduce international transaction charges, could introduce delays through international AML controls and might even lead to tax liabilities in foreign jurisdictions if the laws aren't amenable.

          Cash does potentially avoid the problem, so perhaps a black economy in laundered Sterling notes is what the Scottish government would like to see...

  4. Anonymous Vulture
    Mushroom

    Ironic

    The <ahem> services that are being sought by disgruntled Mt. Gox users are exactly those that were offered by some through Silk Road. Even with the marketplace being replaced, they're going to have a hard time hiring hitmen without access to their Bitcoin wallets. Maybe a contigency contract is in order - you know, if you beat my money out of Karpeles you can keep half kind of deal.

    Of course the dodgy element that likely lost the large majority of the funds 'missing' at Mt. Gox are likely to extract their funds, everyone elses funds, and various body parts from Mr. Karpeles well before any independent effort gets off the ground.

    1. emmanuel goldstein

      Re: Ironic

      get your facts right. silk road specifically prohibited the sale of services/items designed to harm other people.

      1. gibman70

        Re: Ironic

        Silk Road, that paragon of virtuous activities huh.

      2. Anonymous Vulture
        Facepalm

        Re: Ironic

        @emmanuel goldstein

        You are quite correct of course. The Silk Road administrator had such strict rules about harming others that he allegedly tried to hire hitmen to kill at least two people. Whatever your thoughts on the site it was not a Disney attraction.

        1. Mephistro
          Happy

          Re: Ironic

          "Whatever your thoughts on the site it was not a Disney attraction."

          "Welcome to our newest attraction, the Dope-o-rama!!!"

          1. asdf

            Re: Ironic

            >"Welcome to our newest attraction, the Dope-o-rama!!!"

            Best of all the ride doesn't even have to move.

            http://www.fakeposters.com/posters/drugs-amazing/

  5. Anonymous Coward
    Anonymous Coward

    I did not lose my Bitcoins, but I did have them stored for a short while at Mt.Gox. When people were starting to have trouble cashing in their Bitcoins from Mt.Gox, I moved mine to my computer. Of course, then when Silk Road 2 got hacked, I lost some there too...

    AC for obvious reasons.

    1. Anonymous Coward
      Anonymous Coward

      NERDS!!!!!

      What *I* find strange is that a company whose name is an abbreviation of "Magic: The Gathering Online eXchange" goes under, and all anyone is asking about are these weird things called Bitcoins? Bit-*WHAT*?!

      I have over 250 "Magic: The Gathering" cards in an account with those bastards, including the "Shadowmage Infiltrator", "Black Orchid" and "Dwarf Carrying a massive two-headed axe" (*). The whole lot must be worth approaching £73. Will I ever see any of them again, or have they run off to Bermuda with 2000 copies of "Warrior princess in metal bikini armour" (**) and a 17 1/2-sided dice? (***)

      (*) That last one being from the ultra-rare "Cliches of fantasy artwork" series.

      (**) Which inconveniently leaves her bare midriff completely exposed. Er, that one's also from the "Cliches of fantasy artwork" series....

      (***) Don't care if I'm getting mixed up with Dungeons and Dragons or not here :-P

  6. Anonymous Coward
    Anonymous Coward

    Enough with the illegal money thing

    "Mt. Gox is likely to be packed full of dodgy money."

    HSBC:

    Despite HSBC Mexico (HSMX) operating in a country "under siege from drug crime, violence and money laundering" it had inadequate money laundering controls. Between 2007-8, for example, HBMX shipped $7bn to HSBC's US operation, more than any other HSBC affiliate.

    US laws prevent banks doing business with what it regards as the most dangerous individuals and countries. HBUS carried out 28,000 undisclosed sensitive transactions between 2001 and 2007, an internal audit commissioned by the bank found. The vast majority of those transactions - worth $19.7bn - involved Iran.

    Between 2005 and 2008, HBUS cleared $290m worth of US dollar travellers' cheques which were being presented at a Japanese bank. The daily transactions were worth up to half a million dollars, with large blocks of sequentially numbered cheques being handed over.

    If you want to talk about dogey money and illegality, talk to the multi-national banks, HSBC is just one example. Some Bitcoin transactions are undoubtably money laundering, but, as with traditional banking, not everything crypto currencies are trying to do is illegal.

    It is to the advantage of the current financial and political systems that the status quo is maintained and much of the bad publicity is to help reinforce the idea, in the general public's mind, that new ways of doing things are bad.

    1. TheOtherHobbes

      Re: Enough with the illegal money thing

      It's not that our official institutions have the moral high ground on this - it's more they don't want the competition.

      Actual death, never mind threats, seems to have become a popular hobby for a worrying number of mainstream bank employees recently.

  7. Pete 2 Silver badge

    Consider themselves lucky

    > $429 MILLION Bitcoin 'theft'

    ... that BTC value has dropped from its kilobuck+ highs. Otherwise the losses would have been much bigger. Errrrm, hang on .... does it work like that?

    1. sisk

      Re: Consider themselves lucky

      Considering that the crash is largely a result of Mt Gox's woes, I'd have to say no.

  8. The Jase

    All

    All your Bitcoin are belong to us.

    1. Adam 1

      Re: All

      429 million BTC

      That's over 9000!!

  9. IHateWearingATie

    Reinforces my view...

    ... that there is likely to be no point in the average person ever bothering with BitCoin or any of the other crypto-currencies

    No advantages for most of us, lots of disadvantages.

  10. Wardy01

    And people still don't think bitcoins are a scam?

    Really ... still?

    Sheesh!

    This stuff cracks me up ... a currency but mostly used illegally then "illegally" goes missing from a place well known to store illegal funds and people are annoyed by this because they can no longer get access to their scam wallet?

    WTF !!!

    1. Loyal Commenter Silver badge

      Re: And people still don't think bitcoins are a scam?

      Nice FUD you have there - you don't happen to work for a bank do you?

      "a currency but mostly used illegally"

      Sometimes used to launder money, in the same way that bundles of USD are. Not 'mostly used illegally'.

      then "illegally" goes missing

      Most likely to be fraud or theft. The blockchain can actually be examined to see where the funds went, just not who owns those wallets. This is actually more traceable than any conventional money laundering.

      a place well known to store illegal funds

      An exchange, albeit one run badly. Those storing 'illegal' funds would do so in their own wallets, not in an exchange.

      people are annoyed by this because they can no longer get access to their scam wallet

      People are annoyed, beacuse they can no longer withdraw funds from an organisation that said that they held those funds. A bit like if your bank lost all of its money to theives and then told you you couldn't have your life savings back. The difference, of course, being that banks are regulated, and you are covered against this happening by the FSA (to a limit, £85k IIRC). There is a strong argument then, that organisations acting as cryptocurrency exchanges should be regulated in the same way. Note that I didn't say 'banks', as there is no benefit to having someone else hold your BitCoins for you.

      I am interested to hear why you think this is a 'scam wallet' any more than the number held in a computer for you by your bank, or do you keep all of your wages and savings under your bed in the form of gold ingots?

      1. Yet Another Anonymous coward Silver badge

        Re: And people still don't think bitcoins are a scam?

        A little bit more like the London stock Exchange or Nasdaq going bust and losing the record of who owns all those shares. Could happen and there is no Bank of England guarantee to refund all the shares you, or your pension fund, own.

        Bitcoin exchnages are a lot more reliable than modern stock exchanges which frequently have to cancel huge number of trades because somebody's high frequency trading app sold MAX_INT shares of Google for 1p

        1. the spectacularly refined chap

          Re: And people still don't think bitcoins are a scam?

          A little bit more like the London stock Exchange or Nasdaq going bust and losing the record of who owns all those shares. Could happen and there is no Bank of England guarantee to refund all the shares you, or your pension fund, own.

          No it couldn't. Listed companies are responsible for maintaining their own share registers.

    2. Psyx

      Re: And people still don't think bitcoins are a scam?

      "This stuff cracks me up ... a currency but mostly used illegally..."

      You don't really understand Bitcoins, do you?

  11. The Dark Lord

    I'm no Frontiersman

    Seems like cryptocurrency could be the next gold rush, but at the minute it very much looks like the Wild West. And (per title), I'm no Frontiersman.

    People who are OK operating in such high risk spaces deserve the returns they get for their preparedness to trade on those terms. But it's not for everyone and it's not for me. Rather than laughing at the misfortune of people losing money through MtGox though (as some seem happy to do), I'm just content that these ructions are validating my position of sitting out the game.

    1. Kanhef

      Re: I'm no Frontiersman

      Good analogy; much like the California Gold Rush, the people who really make a profit aren't the miners themselves, but the people selling equipment to them. In this case, it's the companies making Bitcoin mining machines. Low-end models cost $2000 or so, top of the line ones are $10,000 to $20,000. Due to the rapid pace of development, they quickly become outdated and too slow to be competitive, so people need to keep buying new ones.

      1. Loyal Commenter Silver badge

        Re: I'm no Frontiersman

        Low end ones (such as some fot eh USb miners) can be had for around £5, so only out by 3 orders of magnitude.

        Admittedly, these mine so slowly, it would take several months to get your money back, assuming no rise in network difficulty (which is a bad assumption)

        1. M Gale

          Re: I'm no Frontiersman

          Low end ones (such as some fot eh USb miners) can be had for around £5, so only out by 3 orders of magnitude.

          And unless you're using someone else's electricity, the hashes per watt-hour rating would probably end up costing you more than you gain?

          That said, a Via APC or Raspi or similar attached to a whacking big battery and a solar panel...

          ...naw, that'd probably still cost you more than you'd gain in any realistic amount of time.

      2. Jonathan Richards 1
        Thumb Down

        Re: I'm no Frontiersman

        > the people who really make a profit aren't the miners themselves, but the people selling equipment to them

        And, regrettably, in all the real-world gold rushes, claim-jumpers and out-and-out robbers who had no compunction about relieving a miner of his gains, and maybe his life. So no change there, then.

      3. Anonymous Coward
        Anonymous Coward

        @Kanhef

        Proof that those making the mining equipment are once again the winners is easily found by the fact that they actually SELL these machines.

        This isn't like the Old West, where mining is dirty back breaking work. You plug it in, provide cooling, and the money just flows in. The fact they sell these machines, rather than operate them themselves, demonstrates quite well to anyone with half a brain that they aren't worth the price paid for them.

        1. Pascal Monett Silver badge

          Re: and the money just flows in

          Sure.

          But then an exchange falls over and your "money" is either gone or seriously deprecated.

          I'm glad that you live happily in a land of milk and honey. Meanwhile, in the Real World, the credibility of virtual currencies has been curbstomped and run over by a column of tanks.

          1. Anonymous Coward
            Anonymous Coward

            Re: and the money just flows in

            Nothing stops them from converting each bitcoin to cash as it is found. It could even be automated.

            A company might want to sell mining equipment rather than running it today, since a third large bitcoin exchange losing several percent of the outstanding total number of bitcoins down with it (yes, Mt Gox is the SECOND) will pretty much be the end of it.

      4. Anonymous Coward
        Anonymous Coward

        Re: I'm no Frontiersman

        the people who really make a profit aren't the miners themselves, but the people selling equipment to them. In this case, it's the companies making Bitcoin mining machines. Low-end models cost $2000 or so, top of the line ones are $10,000 to $20,000

        While not applicable to bitcoin where ASICs have taken over many people switched to other "coins" (litecoin and dogecoin seem to be popular choices) which us a different algorithm which doesn't suit ASICs ... but which can be run efficiently on a graphics card - especially the AMD GFX architecture. This is believed to be causing enough demand for high end AMD cards (and 1kW + PSUs) to cause their prices to be probably 20% higher than they would be without the demand from miners.

    2. Tom 13

      Re: I'm no Frontiersman

      While the prospectors got most of the attention, they didn't get most of the money. That went to the people who provided supplies and processed the gold the prospectors found. IIRC Wells Fargo is one such entity arising from that time.

  12. TeaPartyNutz

    I am loving watching all you geniuses who bought into an unregulated virtual currency lose your stakes. Serves you right!

    1. Anonymous Coward
      Anonymous Coward

      It's the equivalent of "Earn £££ in your spare time, call 0800 2342342333323" but for your PC.

    2. FutureShock999

      And some didn't

      I know a couple that speculated on BitCoin several years ago. They just bought a house nearly entirely in cash. In LONDON. Just from their BitCoin investment cash-out.

      OTOH, I nearly plowed thousands into Mt. Gox over the last few weeks in an effort to arbitrage the exchange differentials. Thankfully I decided to hold out...

      1. Anonymous Coward
        Anonymous Coward

        Re: And some didn't

        There are always winners with any market speculation. For every person who made a million pounds like your friend, there will be a lot of losers who bought in when the press started really hyping it up and now have holdings worth half what they were before.

        Just like all the people who jumped into gold a few years ago when it had its blow off top going from $1500 to $1800 in a month and won't see a new high for a couple decades.

        His story only has meaning for you because he hit the jackpot with that one bet. If he's willing to take a flying leap on that, he's probably lost a few thousand pounds on multiple occasions with other speculations, but most people don't bother telling their friends about their losses, or even if they do most people don't listen in the same they do to the story of striking it rich.

  13. bear_all
    Trollface

    Hands up who's shocked?

    Banks are shady, immoral, back stabbing, money grabbing, self important, two faced, hypocritical establishments that are only out for number one. Which is not you.

    But....

    They are backed, no matter how bad they are either, by governments and bigger funds and financial institutions that demand legislation when things go belly up.

    It's not fair when they get away with stuff, but they only usually do it once.

    Bitcoins / crypto currencies have none of that. Nothing at all. If you invest, you invest into nothing regulated or monitored. No legal body to turn to, nothing.

    Banks and governments won't touch it as they have already got the mechanics in place for trillions of pounds, dollars, and euros, so what do they care when a few million bytes of nothing go missing...

    1. arrbee

      Re: Hands up who's shocked?

      Anyone who expects, say, the UK government to provide real compensation if one of the major banks were to go under is in for a nasty surprise.

      The process would be to reconstitute the failing bank by agreement with its creditors, which would involve first emptying all savings/investment/current accounts (savers are legally not creditors of a failing bank) and then issuing shares in the new bank to those who lost their money. These shares will have a notional value that meets the requirements of the relevant compensation scheme, although it may be years (if ever) before they can actually be cashed in for that value. This allows the government to say they've met their promises without having to pay out large amounts to the wrong sort of people.

      1. Johan Bastiaansen

        Re: Hands up who's shocked?

        That's not the point. The point is that the backing of a government will prevent the bank from going under.

      2. mootpoint

        Re: Hands up who's shocked?

        I have to disagree, based on my experience with IceSave in 2008. I had £300K in that and got a cheque for the full amount from the FSCS within 2 weeks. I had written it off...

  14. Ken Y-N
    FAIL

    "not lost yet, just temporarily unavailable"

    "He's not dead, he's just pining for the fjords"

  15. Richard 1

    Got what they deserved.

    Anyone stupid enough to 'invest' in something like Bitcoin has frankly got what they deserve. How many mathematically based applications have stood the test of time? MD5? DES? Even the seemingly best (mathematical) ideas have flaws that come to light and how can you base financial transactions on something that cannot be trusted? We've already seen a number of flaws in the past couple of years and even the anonymous nature of Bitcoin makes it inherently dangerous to use as a financial mechanism - if someone steals your money then how the hell do you ever prove who did it and get it back? I believe the phrased "a fool and his money are soon parted" fits well here.

    1. M Gale

      Re: Got what they deserved.

      Anyone stupid enough to 'invest' in something like Bitcoin has frankly got what they deserve.

      A shitload of profit? Because that's what a lot of people seem to have got out of it.

      How many mathematically based applications have stood the test of time? MD5? DES? Even the seemingly best (mathematical) ideas have flaws that come to light and how can you base financial transactions on something that cannot be trusted?

      You do know that money is numbers, right?

      if someone steals your money then how the hell do you ever prove who did it and get it back?

      You have that same problem with cash, gold bars and property in general. I guess we should abandon property?

      I believe the phrased "a fool and his money are soon parted" fits well here.

      A phrase that a few bankers seem to be intimately familiar with.

      1. gibman70

        Re: Got what they deserved.

        "A shitload of profit? Because that's what a lot of people seem to have got out of it"

        Only those who got in early fall into this category. You do realise this is a zero sum game, right? People can ONLY make a profit by dumping these onto someone else for a higher price than they paid (the so-called greater fool theory).

        And when something like this happens, it's only the fools holding them...those who made 'a shitload of profit', as you put it, are long gone.

        1. sam bo

          Re: Got what they deserved.

          "Only those who got in early fall into this category. You do realise this is a zero sum game, right? People can ONLY make a profit by dumping these onto someone else for a higher price than they paid (the so-called greater fool theory).

          And when something like this happens, it's only the fools holding them...those who made 'a shitload of profit', as you put it, are long gone."

          sort of like the share market then ?

          1. Anonymous Coward
            Anonymous Coward

            Re: Got what they deserved.

            It is sort of like the stock market if you only look at it from the point of view of short term day-trading. Day-traders play into the short-term volatility and essentially it is just a stupid, more-or-less zero sum, game as the underlying value of the stocks doesn't change much in a normal day. The only people getting rich from this idiocy are the brokers (and the governments collecting stamp duty) who get a percentage whether the players win or lose.

            That said, short term day-trading is not what the stock market is really about. That is just a noisy game being played on the side.

            The real point about "proper" investments like bonds, shares and property is that they pay interest, dividends and rents respectively. Most, possibly all, of their value comes from that ongoing revenue stream and its estimated future development. That is what makes bonds, shares and property better than zero sum over the long term while currencies, commodities, derivatives, etc, (which do not pay any interest, dividends or rent) really are zero sum, at best. At worst, commodities may be worse than zero sum as somebody has to be paid to look after the actual physical commodity. I am not saying that bonds, shares and property are always a good bet. If a bubble develops then it could take a lifetime to recover the money you overpaid for them. Nonetheless, provided you buy into solid investments at a rational price calculated from a sensible estimate of their future earning potential, the great likelihood is that they will do better than break even (in real terms for shares and property) over the long term without any need for their valuations to become less attractive. The fact that bonds and property are currently deep into bubble territory does not undermine the basic truth of this. It just means you need to wait until sanity is restored before investing in them.

            Real investment is not a zero sum game and you don't need to find a "greater fool" to sell good investments on to. Speculating in currencies and commodities, even ones less stupid that Bitcoins, can't match that.

      2. Tom 13

        Re: A shitload of profit?

        Ponzi schemes all do that for those who were in on the ground floor. And they all leave even more misery in their wake for those who were left holding the bag at the end.

        There's only one sure way to get rich: spend less than you make, invest the difference wisely, and do consistently over the entire span of your life.

  16. Philippe

    This is a disgrace.

    I bought 1,000 tulip bulbs and 500 shares in 'The Governor and Company of the merchants of Great Britain, trading to the South Seas and other parts of America, and for the encouragement of fishing', using Bitcoins through Mt Gox - and I keep getting error messages on my Netscape browser. And when I search on AltaVista I don't get anywhere

    1. Anonymous Coward
      Trollface

      Re: This is a disgrace.

      See! you should have done what I did and put your savings into International Buggie Whip stock!

      Ahhhhh, Easy Street at last!!!

  17. mIRCat
    Coat

    Don't concern your self with the flimflam get on with the shim sham... all the way to the bank!

    "Have you lost any money in the Mt. Gox collapse? Get in touch and let us know. ®"

    Certainly not! I keep all my crypto-currency under my mattress. The only place I feel is safe now days.

    Leave those other suckers to be hoodwinked, scammed, bamboozled, goxxed, and fleeced by the likes of Mr. Pon Karpeles.

  18. Anonymous Coward
    Anonymous Coward

    Epic Fail

    Mt Gox first reports the coins stolen-- they can identify the coins after all-- then go after anyone who has possession of the stolen coins. Or, if going bankrupt anyway, simply sell off the rights to collect the stolen property just to get a few yen on the dollar.

    As soon as a list of "hot" coins appears. anyone unlucky to have them and not unload them fast enough will join Mt Gox in chasing down the crims. Or maybe Karpeles if it was an insider job (the Mt Gox problem could just be simple embezzlement and a cover up blaming crackers and bugs in the code. This would be highly risky since there is a known chain of transactions).

    1. Anonymous Coward
      Holmes

      Re: Epic Fail

      Considering the theft happened over years, those bitcoins have probably changed hands since they were first stolen.

    2. Sorry that handle is already taken. Silver badge

      Re: Epic Fail

      Can they identify the coins? A bitcoin is not like a banknote - it has no serial number and is not indivisible - it is just a decimal number in someone's bitcoin wallet. What that wallet does is recorded, but you cannot trace an individual bitcoin because it is not a thing, and they can be traded in tiny fractions of a whole "coin". There may be a list of wallets that contain(ed) stolen amounts of the stuff, but I don't believe there can ever be a list of "hot coins".

      At least, this is how I understand it. If you receive 0.1 "dodgy ones", does that tiny amount taint all of your future transactions? If you then give half of your wallet to someone, do they now have 0.05 "dodgy ones"? Given enough time, eventually everyone's going to have the same proportion of their wallet in "dodgy ones".

  19. FrankAlphaXII

    Like I said about a month ago, anyone looking for a Government to step in for them in this is sorely mistaken. This is YOUR fake money. If it was someone stealing over a million dollars in THEIR fake money, they'd be all over it.

    I'm not an expert in Japanese law, but since I'm pretty sure BTC is considered to be data and not money (at least IIRC), it may fall foul of their data protection laws, which may or may not be that strong.

    And anyone using a BTC exchange without using an encrypted and offline wallet is a fool, point blank. If you don't believe in the value of encrypted data, then why are you using a currency based on a hashing algorithm.

  20. Anonymous Coward
    Anonymous Coward

    Keeping Bitcoins safe

    I don't think I fully understand Bitcoin but I thought it was possible to keep money 'safe' by securing your own wallet. ie. transfer bitcoins to a wallet on your computer (or even print off the relevant string of characters and store the piece of paper under your mattress).

    Doesn't that mean the only people that lost their investment was those that trusted it to an organisation they knew nothing about working in a completely unregulated industry. Why did they leave their funds in Mt. Gox? I thought the whole point of Bitcoin was it was something you could completely manage yourself so you had to trust no-one or no single organisation.

    1. Daniel B.
      Alert

      Indeed!

      Mt. Gox was mostly a BTC payment processor and exchange between BTC and "fiat" currency (I put "fiat" because BTC itself is fiat as well). While you could leave money there (both BTC and USD) it was mostly to buy/sell BTCs and not to keep a balance like you do in a bank.

      People who put their actual savings in BTC should do so in a wallet, which at least you do have and keep yourself in your PC. (Hopefully you back it up every time you do a transaction!)

      Hell, I learned the lesson on not keeping money on intermediate entities years ago, during the Second Life Banking Crash of 2007 and its fallout. Used to have my Linden Dollars deposited at Ginko Financial … until that blew up. We were offered a 1:1 swap into stock for Ginko (Something) Bonds at a then very known stock exchange called World Stock Exchange. Thanks to that, I was able to recover about 33% of the original balance I lost. I said, well, I'll invest by buying stock on the companies listed here.

      Then the stock exchange suddenly halted, all withdrawals were "temporarily" suspended. While trading reopened for some months after a 9-month hiatus, withdrawals never were re-enabled… and the whole thing just disappeared sometime around 2009. In fact, the temporary halt page is still there, and it looks a lot like Mt. Gox's announcement, doesn't it? So while I did use Mt. Gox, and I did have a meager balance there (something like 0.000007 BTC and 0.0007 USD) I never kept large amounts of money there for more time than necessary. And it seems I was right!

  21. Anonymous Coward
    Anonymous Coward

    Does this make it the largest robbery in history?

    ...aside from the sell offs of major utilities, Amazon tax avoidance, pointless rail links and so forth...?

    1. Ian 55

      Re: Does this make it the largest robbery in history?

      Bernie Madoff says no, for one.

      See also the Bitcoin Savings and Trust (BTCST) which ran off with 700k of the things, so it's not even the biggest Bitcoin theft.

  22. Anonymous Coward
    Anonymous Coward

    I'm not really down with the bitcoin stuff but the Mt. Gox guy's face was on TV over here in the land of the stolen bitcoin so I did a bit of googling to inform myself...

    To be honest I'm surprised so many people stashed their virtual cash with this guy and his crew. He (Mark Karpeles) seems to be one of those guys that has done bits and pieces at a bunch of shady companies but hasn't really ever had a proper position anywhere. His "company" Tibanne Ltd is apparently him + a website.. and it seems that almost everyone else involved with Mt. Gox were also expats that had "decided they needed a change in life and moved to Japan".You can't just up and move to Japan like moving around Europe as an EU citizen so I don't really buy that. The skillset of the whole company seems to have been "I knows how to makes sites and turn on servers I does" and they all seem to have KKs registered with inspired company titles like the Japanese for cat.. I have no idea why these people would all need their own registered companies for one man freelancer style operations.. and why would they need them if Mt. Gox was their full time job?..

    Maybe I'm missing something.. did people hold vast sums of money there because the people running it are pretty fishy and don't have a clue because the shady nature of the funds going in and out would be less of a problem?

    1. Daniel B.

      they all seem to have KKs registered with inspired company titles like the Japanese for cat

      hm… NekoCorp does sound like the kind of company name a Bond villain would have. Why haven't I thought about this earlier?

    2. Anonymous Coward
      Anonymous Coward

      He sounds like a thinner version of Kim Dotcom

    3. Phil O'Sophical Silver badge

      hasn't really ever had a proper position anywhere. His "company" Tibanne Ltd is apparently him + a website.

      Worked for Zuckerberg...

  23. mastodon't
    Alien

    Bobby Quine did it with the russian icebreaker

    This whole thing reminded me of my favourite quote from 2012

    Rob Rachwald, director of security strategy at Imperva, commented: "The Bitcoin attack introduces an interesting paradigm: hackers hacking hackers may be more effective than direct law enforcement activity. Like a mafia war where criminals kill each other, law enforcement just sits back and sees who’s left." old Reg link

    Made me re-read William Gibson's burning chrome so my guess is Bobby and russian icebreaker did their thing.

  24. Swiss Anton
    Facepalm

    How easy is it to steal crypto currencies?

    A gives X some £s (inc commission) in exchange for some cryptocoins. X offers to store them (securely) in their wallet rather than sending A the coins. A agrees and X sends some data to identify the coins. Sometime later A wants to spend their coins, contacts X, and the details are forwarded on to party B using the appropriate protocols. B receives the cryptocoins and is happy and sends some goods to A. A receives their goods and is happy.

    Now what if X has already stolen and spent A coins. Well, he can use the £'s of some new depositor (C) to buy some more coins and pay them to B. Lack of traceability means that B is none the wiser and is happy.

    X can get away with this until there is a spike in price. Between getting C's money and buying B's coins the price rises and X makes a lose. A's are also wanting to sell their coins in the wallet fearing the bubble will soon burst, so X has to hand C's £s straight to A. The loses continue until they can't pay all the A's & B's out there. At which point X says oh dear, someone has robbed us. If the accountants are in on the scheme then nobody knows, that is until it all unwinds. Mr Ponzi once had a similar idea, it ended much the same way.

  25. Anonymous Coward
    Anonymous Coward

    Well, Bitcoin is not ready for prime time...

    There's no upside to this story for Bitcoin.

    At least we found out it was a theft, and not someone doing a social attack/libel against Mt. Gox. A social attack that allowed someone to manipulate the currency by defaming Mt. Gox would have been even more destructive.

  26. Anonymous Coward
    Anonymous Coward

    The way to do business

    > Karpeles said walking away “is not a part of how I usually do things”.

    More like running away then? :-)

  27. Anonymous Coward
    Anonymous Coward

    If 750,000 were "stolen" was it an inside job? With $429 million, one could easily hide. The best part, how many countries will actually do anything? Anyone that complains also faces the possibility of the tax-man wanting their share of it; oh and plus interest.

  28. Anonymous Coward
    Anonymous Coward

    Meanwhile....

    ....sales in popcorn go through the roof!

  29. Anonymous Coward
    Anonymous Coward

    And so it comes crashing down.

    ...why?

    "one angry commentard claimed he had $10,000 to plough into a manhunt for Karpeles."

    .

    See even the believers are now offering proper money instead of bitcoins for their hits.

  30. Valeyard

    for funsies..

    ...i spend about 30 minutes reading the reddit comments on the subject of how much people lost

    I was a tad dismayed at seeing all these rich people with so many zeroes appended to their net worth, until i remembered why they were posting and i felt so happy

    (Don't judge me, Please remember we're British, we love to laugh at the misfortune of those doing better than us)

  31. Winkypop Silver badge
    WTF?

    To lose one bitcoin.....to lose two....but

    ....to lose 750,000?

    Hmmm, there's something decaying in a Scandinavian country methinks!

  32. The Jase

    Business plan

    Mark Karpeles' business plan

    http://i274.photobucket.com/albums/jj277/anaisjude/monorail.jpg

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