
The Inside Story of Mt. Gox, Bitcoin’s $460M Disaster - esalazar
http://www.wired.com/wiredenterprise/2014/03/bitcoin-exchange/
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brianpgordon
This is the relevant paragraph for "our crowd:"

> Mt. Gox, he says, didn’t use any type of version control software — a
> standard tool in any professional software development environment. This
> meant that any coder could accidentally overwrite a colleague’s code if they
> happened to be working on the same file. According to this developer, the
> world’s largest bitcoin exchange had only recently introduced a test
> environment, meaning that, previously, untested software changes were pushed
> out to the exchanges customers — not the kind of thing you’d see on a
> professionally run financial services website. And, he says, there was only
> one person who could approve changes to the site’s source code: Mark
> Karpeles. That meant that some bug fixes — even security fixes — could
> languish for weeks, waiting for Karpeles to get to the code. “The source
> code was a complete mess,” says one insider.

~~~
guelo
I would only feel safe using a completely open source exchange to hold my
money.

~~~
erobbins
I guess you don't use any online banking services?

~~~
tbyehl
US banks have FDIC insurance to protect depositors against insolvency.

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nakedrobot2
Nothing new here if you have been following the story. It is a glossy, quick
summary of all the conjecture that has been posited thus far in many other
places, not delving into really any detail or saying anything new.

I am sure this story is going to get much weirder before it sees any semblance
of sunlight or truth. And it might take many years for that to happen.

~~~
natdempk
Agreed, this was pretty far from the "inside story" of Mt. Gox and was more
just about Karpeles incompetence and personality faults.

"seated, inexplicably, on top of a blue pilates ball" really irked me, because
its not inexplicable. The guy probably has back or circulation problems, give
him a break instead of giving him crap for every last detail of his life.
There's more than enough to critique about the fact that he ran the largest
bitcoin exchange into the ground.

~~~
wpietri
I own a couple of those balls, and I still think it's inexplicable that he
would sit for a Reuters TV interview on one. Watch the video here:

[http://www.youtube.com/watch?v=LLjlOw3TVc8#t=1m10s](http://www.youtube.com/watch?v=LLjlOw3TVc8#t=1m10s)

If you are trying to project that you are the CEO of a stable financial
institution, having a lot of people say, "What the hell is he sitting on?" is
not the best PR strategy.

~~~
cma
Should I cancel my Google Wallet account?

[http://www.corechair.ca/wp-content/uploads/2013/03/google-
ex...](http://www.corechair.ca/wp-content/uploads/2013/03/google-exercise-
ball1-300x300.jpg)

~~~
wpietri
Actually, that's a great example of how to use those well for PR. When's that
photo from, something like 2005? Before?

Early on, Google did a great job of creating a young, hip, fun image. They
wanted people to like them. Miracles and wonders, all from these slightly
goofy Californian eggheads!

But that's not the kind of image you want to create for a financial trading
platform on which you want people to deposit lots of money and feel safe. You
could go brilliant and edgy or respectable and serious. But goofy? Nope. I
can't imagine he had a PR person there for the interview. Just another sign
that he wasn't qualified to run a billion-dollar business.

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coldcode
It's pretty clear from this story that the "CEO" had no business running a
half billion dollar business, much less a lemonade stand. It seems he mostly
lucked into the business and luck doesn't work as a business plan, especially
in a financial business.

~~~
mwfunk
I had no idea lemonade stands were so complicated! :)

~~~
yogo
It might not be, but incompetence can lead to bad things, like people dying
from accidentally being poisoned from lemonade purchased at a stand.

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epaga
This is anything but the inside story. The only "insider" information is the
one guy who interviewed at Gox and claimed they don't use any VCS (but he made
this claim a while ago).

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boon
When are we going to see a change in the rhetoric? This isn't _Bitcoin 's_
disaster, it's wholly Mt. Gox's.

~~~
lmkg
Paraphrasing Clinton, that depends on what you mean by the suffix 's.

It is wholly Mt. Gox's disaster, in the sense that they alone caused it and
are responsible for the consequences.

It is Bitcoin's disaster in the sense that these events impact the Bitcoin
ecosystem, and are (could be) a disaster for Bitcoin adoption as a whole.

~~~
boon
+1 purely for self-recognized Clinton-style grammar argument.

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habosa
Sounds like Karpeles is a guy with a short attention span who looks for low-
hanging fruit and ignores the big issues because he may not be able to solve
them. I have this issue with projects too, but of course I never ran a
9-figure Bitcoin exchange.

~~~
swalsh
Its not the role of the CEO to solve those issues, its his role to make sure
he has people who DO know how to solve it working on it, and to make sure they
have the resources they need to do it.

He seems better suited for a role as CTO, though even that may be a stretch...

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aianus
How did Mark Karpeles afford to buy MtGox from McCaleb?

~~~
psykovsky
A fair amount of BTC and USD together with 12% on the company allied to the
fact Jed was kind of expecting the difficulties ahead and wanted out. But I
mean OUT, really OUT...

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ck2
Somewhere in an alternate universe, MtGox was run correctly, they brought on
litecoin this week and lifted it into high double digits.

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antonius
The biggest red flag for me was Mt.Gox not declaring itself as money
transmitter and being fined by the U.S Government as a result.

Knowing it would have a great deal of American users and that it would have to
abide to rules, Mt.Gox overlooked this. Everything that followed only
validated my decision to stay away.

~~~
anologwintermut
US law is pretty clear on the fact that Mt. Gox is a money transmitter (you
don't have to actually transmit money to be one, just things equivalent to
money). Whether they are subject to US jurisdiction or not might be debatable
(though not really as far as the feds are concerned if they have US
customers).

~~~
oijaf888
Do you know if CCP Games is registered as a money transmitter? Eve ISK has
value and is as equivalent to money as bitcoins so they should fall under that
umbrella right?

~~~
ecdavis
ISK is not as equivalent to money as bitcoins. For one, there's no CCP-
endorsed way to turn your ISK into money.

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alecsmart1
Am not sure when mobile phone became a requirement- "Bitcoin promises to give
a bank account to anyone with a mobile phone, no ID required."

~~~
ghshephard
Is it possible for me to use my iPhone to make a payment with bitcoins? Does
apple allow bitcoin wallets onto the Apple Store?

~~~
pseudonym
Short answer, no.

Long answer: [http://www.pcworld.com/article/2095060/apple-removes-
blockch...](http://www.pcworld.com/article/2095060/apple-removes-blockchain-
last-bitcoin-wallet-app-from-mobile-store.html)

------
ChuckFrank
Even if Bitcoin balances can be made bullet proof, the Achilles heal is that
it is not a legal tender, and that there are no market fundamentals to
contribute to its exchange rate. My 660 Trillion Zimbabwe dollars, sitting
here on the desk, are solidly in my possession. So what? P=0 means they have
zero use value other than as a conservation piece. Interestingly, when I show
them to people and they handle them (Produced by the British Bank Note Company
that makes currency for a lot of countries) they frequently falsely conclude
that the are phony. They have a hard time reconciling "real" with "worthless"
Whether or not Gox slid into fractional reserve banking is interesting, since
if they did (I doubt it) they were basically betting against their depositors.
To do that they would have had to taken Bitcoin balances as they came in, sold
them for hard currency, wanted for Bitcoin to fall, buy it back, and pocket
the difference, at the same time being able to honor withdrawals so there was
not a bank run. The way this ended suggests that either something else
happened, or they "bet the farm" and shifted virtually all of the Bitcoin
deposits at a hard currency Bitcoin price below what it is worth now. The got
caught "short" bigtime like in a margin call for stock bought on the margin.

