Mt. Gox files for bankruptcy, hit with lawsuit

Comments (18)
CoinSlammer wrote:

How exactly did the alleged hackers gain access to the bitcoins kept in cold storage or on paper wallets? The recent news about the pony bot network couldn’t have come at a better time…

Feb 28, 2014 7:29am EST  --  Report as abuse
RichardOmega wrote:

But Bitcoin is still a safe investment, right? Right? “Bitcoin inventor grants interview, urges calm, disappears” — haha. http://dandygoat.com/bitcoin-inventor

Feb 28, 2014 9:16am EST  --  Report as abuse
indianajan wrote:

I wouldn’t call them a “safe buy”, but there’s surely a few hundred million dollars worth that we can buy at a cool discount at the moment.

Feb 28, 2014 9:53am EST  --  Report as abuse
Obsilutely wrote:

I can’t wait for the conspiracy theories that are going to spin out of this one.

I wonder if Alex Jones is going to pin it on the lizard people…

Feb 28, 2014 9:59am EST  --  Report as abuse
matthewslyman wrote:

How can the BitCoin ecosystem be “healthy” if ≫7% of the entire assets in circulation are stolen? I’m not even speculating here on the proportion of BitCoin transactions that are criminal or black-market…

Feb 28, 2014 11:50am EST  --  Report as abuse
Kahnie wrote:

How can you say there was a theft for something that is virtual?

Feb 28, 2014 1:31pm EST  --  Report as abuse
deeplyCynical wrote:

@Kahnie

If I write a novel manuscript on paper and someone takes it from my house and has it published under his name, is it not theft?

If so then surely it is still theft if I had wrote the novel manuscript on my computer and stored it in an electronic file instead of on paper.

Would you not say that both the electronic file and a unique Bitcoin are just made up of virtual 1s and 0s.

That being said… when the chips are down, i’d rather be in possession of a gold coin than a Bitcoin!

Feb 28, 2014 2:00pm EST  --  Report as abuse
Flagler wrote:

Madness of the crowd

Feb 28, 2014 3:01pm EST  --  Report as abuse
disengage wrote:

no surprise here..just greed propels those , that are always affected by such schemes..you win a few, you lose many!!!

Feb 28, 2014 3:20pm EST  --  Report as abuse
FreeOregon wrote:

What if the NSA did the hacking? They have over 30,000 competent hacker and sufficient motive – to discredit bitcoin as a store of value.

Feb 28, 2014 3:44pm EST  --  Report as abuse
DynamicDK wrote:

The Bitcoin ecosystem will be fine, even with this many coins stolen. It is sad, but anyone who still had coins in Mt. Gox had to know the risk they were taking.

The writing has been on the wall since last year, and they were a subject of discussion in the community on a daily basis. Most of the people that were still in Mt. Gox were people that were attempting to do arbitrage, large traders who understood the risk, and people who failed to do any research into the company they were sending money to.

With effective security, accounting, and cold storage, this kind of loss is impossible. If a hacker somehow managed to hack into one of the other exchanges, which is very unlikely (the other big ones take security more seriously), then the most they would be able to steal would be what is in the exchange’s hot wallet. The hot wallet should contain, at most, the amount of coins that would be required to cover the withdrawals for a day. The vast majority of the coins would be in cold storage, which means they would be contained on a computer that is not connected to the internet. It is IMPOSSIBLE to steal those coins without physical access to that machine. Even with physical access, multi stage authentication should be required to access any amount of funds.

Unfortunately, somehow Mt. Gox managed to screw this up, even though it is a very basic, easy form of security that is used by even small bitcoin related companies.

This loss was related to negligence, and not bitcoin itself in any way. As it is not clear yet what happened exactly, I cannot say for sure how it happened, but the information I have found leaves it with 2 possibilities. Either one, Gox stopped using cold storage for some reason, or two, Gox was transferring funds from cold storage to replenish their hot wallet without monitoring how many funds were going out, or how many were remaining.

Possibility one is effectively the same thing as a bank storing half a billion dollars in a warehouse with no security cameras, or guards. Sure, if the locks on the doors, or security systems in place, manage to keep people out, the cash will remain there, but if someone breaks in, they can loot the entire place.

Possibility two is like a bank’s vault losing money, but the bank not realizing that more money was missing than was suppose to be. Each day, they reload the vault to a certain amount, then the cash disappears, and they do it again…

Absolutely disgusting violation of the trust their customers placed in them.

Feb 28, 2014 5:26pm EST  --  Report as abuse
Kahnie wrote:

How do you file a lawsuit against a company that only has virtual money? Maybe it’s a virtual lawsuit in a virtual land.

Feb 28, 2014 8:13pm EST  --  Report as abuse
Kahnie wrote:

@Deeply cynical: If you only had one copy of the manuscript and it was stolen, who is to say it was yours if it was transcribed on a computer and the original was gone? If you could identify the specific “1″ and “0″ you would be a virtual genius (especially if you didn’t have a backup on a thumb drive or a portable disc drive. Then again, if a tree falls in the middle of the forest, and no one hears it, did it make a noise? I too hold silver and gold coins in safety deposit boxes. That way I can look at my “stuff.” It is NOT virtual.

Feb 28, 2014 8:19pm EST  --  Report as abuse
Kahnie wrote:

Free Oregon: Now there’s a pleasant idea.

Feb 28, 2014 8:20pm EST  --  Report as abuse
Fromkin wrote:

one has to be BitDumb to believe in BitCoin

Feb 28, 2014 10:41pm EST  --  Report as abuse
XiroMisho wrote:

Yeah, it’s healthy… and safe! Totally safe! Te idea that one companies complete failure to properly secure the situation and, rather then recover the money and return it to investors… FILES FOR BANKRUPTCY WITH EVERYONE WHO HAD MONEY WITH THEM OUT OF THAT MONEY.

Right…. Listen it happened once, it WILL happen again. Especially since these hackers got payday. When other, better hackers, see that Bitcoin exchanges can be hacked, and that since they are not regulated to a government no one will come after them….?

think of it like this:

Robber: “Wait, If I rob this bank the bank goes away and no one knows who I am because I don’t physically have to be there?”

That’s the easiest hit in the damn world. Bitcoin is DONE after this. These statements are being made now in a vain attempt to halt the NOSE DIVE Bitcoin is in now because of the absolute shattering in security that people have now gotten.

Then again what to you expect from a group of folks who think the only cause of inflation is a growing money supply.

Mar 01, 2014 1:51am EST  --  Report as abuse
_sideshow wrote:

Filing for bankruptcy is not the same as filing for bankruptcy protection – You should really get the title of your articles correct before publishing.

Mar 01, 2014 12:36pm EST  --  Report as abuse
zillion167 wrote:

Many unanswered questions. Bitcoin isn’t anonymous. Where did the bitcoins go. Why was the bitcoin foundation not terribly concerned until a day before the closure. The feds were already looking for money laundering yet didn’t notice all the bitcoins gone? and so on and so on.

Mar 01, 2014 9:29pm EST  --  Report as abuse
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