
$4.1m goes missing as Chinese bitcoin trading platform GBL vanishes - chaz
http://www.coindesk.com/4-1m-goes-missing-chinese-bitcoin-trading-platform-gbl-vanishes/
======
nwh
Amusingly enough, this isn't even an uncommon occurrence in the Bitcoin world.
Either compromises or shady actors seem to take down a large portion of their
services, usually taking large sums of money with them.

It does look like a similar case to inputs.io and a few other sites too,
people "invest" or store large amounts of money with a person despite the
community making every attempt to warn people that it is a terrible, awful,
terrible idea to do so.

~~~
verroq
From a game theoretic perspective where no parties can be held accountable,
being a scammer or hacker will always yield higher pay-offs. This is why
Bitcoin will tear itself apart.

~~~
klipt
What's funny is that because the bitchain (the transaction history of EVERY
BITCOIN EVER) is public knowledge, one could easily blacklist stolen bitcoins
(simply blacklist the wallet that received the stolen goods and all subsequent
receiving wallets, and refuse to accept bitcoins from any of them).

The difficulty would be making the blacklist fast but accurate, i.e. there'd
need to be high standards of proof that coins were stolen rather than traded
fairly. But if blacklisting took too long the thief could already have fenced
the coins for real assets before the blacklist took effect.

Ultimately it could end up looking like credit card fraud alerts - suspicious
bitcoin transactions could be put on hold (temporarily blacklisted) until
confirmed by the wallet owner. But at that point you lose anonymity. I guess
you can't have anonymity _and_ accountability...

~~~
Guest98130
How would this work though? You have 4m worth of _blacklisted_ bitcoins. What
happens if you go to a legitimate store, like NameCheap, and buy a domain
using those bitcoins. You're going to add NameCheap to the blacklist now,
because these coins went through them?

Well, you could say NameCheap wouldn't accept those coins in the first place,
but can you really expect every store and person to be using this list?

What happens if you take those 4m worth of bitcoins, send 3m to your own
wallets, and distribute 1m to random wallets of strangers? How do you know
which wallets to blacklist? All of them? You're just going to put tens of
thousands of people in the dark, and say their bitcoins are now worthless and
blacklisted, because they received a random payment?

~~~
klipt
> distribute 1m to random wallets of strangers

Hmm, I didn't realize you could send money to people without their consent.
That would make blacklisting more difficult. But if receiving the bitcoins was
indeed unintentional on their behalf, you could just temporarily blacklist
them until they returned the stolen bitcoins to the original owner.

In theory this could lead to attacks where small amounts of stolen bitcoins
are continually deposited in victims' accounts, but that could be avoided if
the exchanges themselves enforced the blacklist and refused to process
transactions from blacklisted accounts (except back to the theft victim).

> Well, you could say NameCheap wouldn't accept those coins in the first
> place, but can you really expect every store and person to be using this
> list?

It would certainly require a cultural shift in bitcoin use, yes. I just find
it funny that the entire transaction history is public record, yet bitcoins
can still be stolen!

~~~
bencoder
> I didn't realize you could send money to people without their consent.

I think the point of blacklisting would mean that miners wouldn't include
transactions from those addresses in blocks. Once the transaction is in a
block then there's not much that can be done, so blacklisting will require
cooperation among a majority of miners.

------
frandroid
So bitcoin has given us untraceable currency without the state, except that
without traceability, you also have no accountability, no justice, no law.
This libertarian nightmare will soon come crashing down.

~~~
Anderkent
Yeah, exactly. That's why no one uses cash anymore. Just think of it! If you
give someone your cash, they might just disappear!

/s

Bitcoin won't die just because people that want to ride the bubble lose some
of their investments. It'll slow down, of course, but storing wealth is not
bitcoins selling point, and trusted central exchanges are not essential to the
model.

~~~
tedunangst
I've never had someone on another continent take cash out of my wallet.

~~~
MattyRad
Clearly, because you're smart enough not to give someone on another continent
your wallet, as per the analogy.

~~~
tedunangst
I'd love to say it's because I'm smart, but inaccessible to bad actors on
other continents is the default setting for my wallet. Hell, I'm not smart
enough to even figure out how to change the setting. :)

~~~
mcherm
It's the default for Bitcoin wallets also, but some users choose to "change
that setting".

------
malandrew
Seems to me like bitcoin is the perfect business opportunity for people with
the security skills and know-how to do really really well. The bitcoin world
needs solid reputable security professionals to operate the exchanges and
wallets. I'd love to hear cperciva's or tptacek's take on bitcoin as a startup
opportunity since they are prime examples of people who could startup a
bitcoin business and instantly attract people since people would trust them to
do what is right.

~~~
dragontamer
You mean, financial services? Financial Service companies build trust and
relationships with people.

This has nothing to do with "security", and everything to do with "How can I
be sure that the other guy isn't a jackass??". Paypal became popular as a
financial service to Ebay purchases.

The startups that are running themselves as trustworthy businesses will get
ahead. But a year, two years, or even three years is not enough to gain a
decent relationship. Lets see if "Coinbase" can weather the storm

~~~
simonebrunozzi
Which storm is Coinbase going through?

~~~
dragontamer
The question that needs to be answered is: can Coinbase (and other reputable
BTC services) establish a trusted reputation with their customers when so many
other BTC services are either disappearing or outright scamming their
customers?

Or will the general public look at Coinbase and think "that newfangled
unreliable Bitcoin thingy".

------
jusben1369
It's important to remember that millions of dollars are lost daily globally to
CC fraud.

~~~
lobotryas
Yes, but victims of CC fraud have numerous laws and protections on their side
that make it much easier to recover from this incident.

On the other hand, if a BC user had their wallet stolen, then they have zero
recourse.

~~~
dajohnson89
Is it not the case that one can back up their BC wallet into a locally
encrypted file, in the event that their online wallet is compromised? I'm a
user of coinbase, and have a local backup. I was advised to do just this: take
a backup of my wallet, just in case something bad happened to the server. That
way, I have legal recourse if push comes to shove.

~~~
sneak
If your online wallet is compromised and the coins are transferred to new
keys, ten backups of the keys that USED to own those coins will be
insufficient.

------
antonius
Being someone who got scammed out of ~5BTC back when they were ~$50 dollars,
this happens way too frequently. We only get to hear about the large cases.

------
hatred
I am new to BitCoin. Can someone help me understand how the money was stolen ?
I thought coins are stored in user wallets ?

~~~
MAGZine
They are, but if you wish to exchange currency to/from real dollars, then you
need to use an exchange like this, who will "trade" you BTC for currency.
Unfortunately, if you had currency stored with the exchange, but did not make
a transaction for real currency, it has simply disappeared.

~~~
jafaku
You can also trade in person, like people have done for thousands of years
with gold.

------
avolcano
This is why I always find skyrocketing conversion rates of Bitcoin so funny:
it's certainly not impossible to get money out as a traditional currency, but
it's damn sure fraught with peril.

------
alttab
Also known as theft. Pesky regulations...

As more people use bitcoin, they can only react when things like this happen.
Take that lesson and carry it with you.

~~~
MysticFear
Nothing to do with regulations, all to do with law enforcement. Theft is
illegal.

~~~
PeterisP
It has everything to do with regulations - "theft is illegal" wasn't stopping
bankers from simply running away with customers' deposits, which used to
happen - only regulation did that.

------
sidcool
The article mentions that GBL vanished "without a trace". It's a disconcerting
statement.

------
fat0wl
for anyone unfortunate enough to have clicked this comments link....

the tl;dr is "the GOOOOVernment mannnn money money govt sucks MUGGERS. bitcoin
is stupid. bitcoin is GREAT! credit cards are like bitcoin but the BANKS are
the REAAAAL thiefs post-modernism post-modernism capitalism 'Hello!' the
government. THE government. wallets were stupid to begin with. Electronic
currency is flawed i hate bitcoin/creditcard cash is flawed cash. Rousseau."

My 2 cents, FWIW... the people I see locally spoutin bitcoin aren't true
patriots who believe in ultimate freedom, they're more like get-rich-quick-
schemers lol

~~~
sanskritabelt
The only bitcoin person I've met IRL consistently made a bunch of bad
decisions on a wide variety of topics.

~~~
clarkm
You don't know very many techies, do you?

~~~
betterunix
What makes you think Bitcoin is overwhelmingly popular among techies? I can
only name 3 techie friends who have ever actually used Bitcoin at _any_ point
in their lives, and I do not think any of them are still using it.

------
netcan
The interesting thing about all these bitcoin headlines is how they don't seem
to slow bitcoin's advancement. I guess if the proposition is compelling enough
it can survive a lot of hiccups.

Slightly tangental: I wish there was some way of judging how much bitcoin is
being used as a medium of exchange as opposed to a value store/speculation
vehicle.

------
sashaeslami
Does coinmkt.com or Mtgox.com solve this issue?

~~~
pmorici
No, you have to keep either coins or cash on deposit with an exchange in order
to trade. The smart thing to do is not store your coins on the exchange unless
you are actively buying to selling them but plenty of people get lazy and just
let them sit there.

~~~
dragontamer
And if you've got money holed up in Mt. Gox, who's exchange rate is
significantly worse than every other exchange, what do you do?

Ask anyone 9 months ago whether or not trusting Mt. Gox was a good idea. They
were the largest and most reliable exchange, and now it has become
increasingly difficult to get your money out of it. And now the exchange rate
on Mt. Gox itself has been effected by their problems...

~~~
pmorici
"And if you've got money holed up in Mt. Gox, who's exchange rate is
significantly worse than every other exchange, what do you do?"

I'll tell you what I did, I bought coins and transferred them out of there
ASAP. The official line is that their bank will only do 10 outgoing USD wire
transfers per day period. Of course limiting outgoing transfers is the same
strategy you would want use if you were financially insolvent and wanted to
forestall a run on the bank.

~~~
dragontamer
Yup, that is the correct strategy, but Mt. Gox's inflated exchange rates
punishes you for adopting this strategy. But this is definitely the right way
to go.

------
shangrula
This looks like theft of fiat money, not BTC. I.e. you deposit and then buy
BTC. So they took the deposits. Hence why it's not that traceable, iconically
it's easier to start looking for BTC's as the transactions are public. Cash,
especially internationally, can be fuzzier.

------
wehadfun
Novice question. If the transaction history of every bitcoin is public why
couldn't the owners find their bitcoin?

Do you have to have the bitcoin to get the history? Does the transaction
history not say where the bitcoin went?

~~~
dwaltrip
It tells you the bitcoins have moved to address 1ekcj57h2kde45... (made up
example). But you have no idea who owns this random address

------
beagle3
All the Bitcoin-doom prophets in this thread should just consider that larger
amounts of money disappeared when Refco and when MF Global went down; and that
did not spell the end of brokerage, USD or anything else

------
atmosx
Probably not complete but interesting list of bitcoin heists:

[https://bitcointalk.org/index.php?topic=83794.0](https://bitcointalk.org/index.php?topic=83794.0)

------
vertis
The currency may be P2P, but the trading of it is mostly certainly not.

I wonder if it's possible to create a more P2P trading platform for digital
currencies.

------
dror
Tulips, tulips, tulips.

Some people never learn.

~~~
jafaku
What does that have to do with a theft?

Is gold or the USD a tulip too?

------
LAMike
Unfortunate. Hope it doesn't scare off China's BTC community

