
Mt. Gox may have lost 750,000 bitcoins - jordhy
http://two-bit-idiot.tumblr.com/post/77745633839/bitcoins-apocalyptic-moment-mt-gox-may-have-lost
======
hencq
> The likely consequences will be larger than this localized financial damage,
> and we believe that the benefits of keeping MtGox stable and running
> outweigh the risks. This isn’t about saving MtGox anymore.

I think (and really hope) this is satire. Are they suggesting bailing out a
bitcoin 'bank' because them falling over would be too much of a risk for the
whole system? The irony here is a little too much to be true.

~~~
345723
There is a lot of irony to be had in the world of Bitcoin. From security to
stability to manipulation.

------
smtddr
This reads like a tabloid. It may or may not be true, but this writing style
is very panic-inducing. I don't recommend people take any[1] kind of action
based on info received in this manner.

______

1\. I say this, but if this makes more people panic sell and drive down
coinbase.com's price below $500, I'm going to take a certain action... Hint:
_“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful”
---Warren Buffett_ , but don't go sending funds to MtGox!

EDIT: OOPS!!! Forgot about this possibility: _Note! We 've exceeded our normal
buy limits for today. If you would still like to purchase you will receive the
market price of bitcoin on Friday Feb 28, 2014 at 04:53PM PST after your funds
have arrived._ \---Coinbase.com

------
bendoernberg
So MtGox internal documents say "The reality is that MtGox can go bankrupt at
any moment, and certainly deserves to as a company"? That sounds...unlikely.

~~~
anigbrowl
Assuming for a moment the leak is accurate, the document could be a memo from
an organization like the bitcoin Foundation that has been leaked from within
Mt Gox. I didn't get the impression that MG management were necessarily the
authors of the document.

------
Geee
This is FUD. Someone is trying really hard to push the market down. MtGox has
withdrawing limits, which means that the only way to exploit the malleability
bug is to slowly drain the hot wallets, and MtGox would have to keep
replenishing them from their cold vault; also assuming that MtGox's system
would resend apparently failed transactions. This means that there's no way
they wouldn't have noticed missing funds in their balances. No way someone
could slowly steal 750K BTC, without anyone noticing. Just no way.

~~~
rblatz
One would hope that they would periodically compare coins on hand vs coins
reportedly held.

------
Udo
I'm hearing the malleability exploit has been used undetected for years. How
many people can actually be in the know about such a thing and yet keep silent
about it for a long time? That means somewhere there's a very small group of
people who have about a million BTC in their wallets, and nobody noticed them.

I have to wonder what it looks like when a person suddenly becomes very rich
without any explanation for it. Wouldn't at least some of these people have
attracted a lot of attention?

The cynic in me thinks the lack of evidence left behind probably points to
organized crime or even governments at work behind the whole thing.

~~~
existencebox
At the risk of drastically oversimplifying... This seems hauntingly familiar
to a pattern I've seen dozens of times in MMO's when the right sort of exploit
falls into the hands of the right group of people. Once you've found out about
it, the damage is done, and usually now obfuscated in such a way as to be
unfixable(e.g. laundering); now a handful of players can control the bulk of
currency in a market. "the right people" aspect is the "keep quiet" aspect;
and is necessary for the impact to have sufficient time to really grow in
magnitude. (right people doesn't have to != normal people)

Perhaps I'm just overfantasizing the whole thing in my head; but I like to
think (and probably in doing so coloring my perceptions) that there are
similarities between certain events in cryptocurrency and game-currency life
cycles.

------
dragontamer
I'm not one to trust MTGox right now, but this is nothing more than an
unsubstantiated rumor on a random blog site.

It is a shame that straight up rumors are making their way to the top of
Hacker News.

~~~
jakejake
It's tempting to buy some bitcoin from mtgox just on a lark since the selling
price is so low there. It's a heck of a gamble but would be a steal if they
manage to pull themselves out of this mess.

~~~
anigbrowl
Value is relative.

I mean, would you like some Browlcoin for only $75? That's about 30% less than
what BTC is going for on Mt Gox, so I think you'd be mad not to cash on this
opportunity. Available for a limited time only, email me for more details :-)

~~~
jakejake
With all the recent news obviously I'm glad I didn't decide to buy on Gox!

The difference in what I'm talking about is that Bitcoin was selling for $135
on Gox while simultaneously selling on other exchanges for $700. That's a hell
of an arbitrage opportunity. Browlcoin may one day be a steal at $75 but the
problem is that it currently has no recognized value anywhere. So that would
be speculation, not arbitrage.

------
mschuster91
That's a massive amount of cash. And... the fact that there is a "leak from
cold storage to the hot wallets" leads me to one conclusion: It could have
been noticed WAY before, if anyone had looked at the "amount that SHOULD be in
the hotwallet" and the "amount that IS in the hotwallet" before re-filling it.
That alone would have shown that there is/was theft or BTC loss. Seriously,
did MtGox run an exchange with virtually no bookkeeping?!

~~~
jnardiello
It all started as "Magic the gathering exchange", so... yeah. Pretty much
everything is possible.

~~~
saurik
"Possible citogenesis concerning whether MtGox ever hosted an MtG trading
site"

[http://en.wikipedia.org/wiki/Talk:Mt._Gox#Possible_citogenes...](http://en.wikipedia.org/wiki/Talk:Mt._Gox#Possible_citogenesis_concerning_whether_MtGox_ever_hosted_an_MtG_trading_site)

------
TrainedMonkey
I really do not understand how it is possible to run a system size of MtGox
without some kind of reconciliation.

You have a written record of how many bitcoins came in, were traded, and went
out. Let's say you could not detect if transaction was successful or not, you
still should have been able to detect that you are missing some bitcoins
relatively quickly.

~~~
wpietri
There is a story about the country hick who comes to the big city and gets a
checking account. A couple weeks later, the bank manager call him up to tell
him that he has overdrawn his account, that he has no more money. "That's
impossible!" says the rube. "I still have 3 checks left!"

Too many programmers are woefully ignorant of how to write systems that handle
money. Too often I have seen systems that treat money as floats, or have
primitives that allow the creation and destruction of money. Accounting and
banking have their own special set of rituals.

I think most programmers can understand this if they think about it a bit.
Think about the lower quartile of coders [1] you know jumping in and writing a
system to handle many kinds of money, including a novel kind that is poorly
understood. Now put them under conditions of massive growth, conditions in
which there is a shit-ton of money, fiat and crypto, arriving and departing in
buckets.

I once saw a cartoon where a bank teller is saying to a worried-looking
customer, "I'm sorry sir, there's not enough money in your account. Let me see
if there's enough in somebody else's." I could easily believe that's what
happened, here, the Dunning-Kruger effect writ large.

[1] I have no knowledge about MtGox's developers; this is just a though
exercise.

------
jnardiello
What i think here is that the author actually _knows_ what is the truth but
can't prove without putting the source in a horrible position. Therefore he's
just passing the news.

It's is completely neglectable if mentioned documents actually exist or not,
MtGox actions speak for themselves: Marketplace total lock, pulled from BT
foundation, national currencies blocked. Come on people.

Worth mentioning that while i was fascinated by the bitcoin world, i never
invested in it. So far, all the marketplaces i was interested in, just failed
(bitcoin-24 and mtgox). Bitcoin might be cool, but current web technologies
can't guarantee consistency.

~~~
glomph
Do you have any reason other than their own claim at credibility to trust this
random blog on the internet?

------
waterlesscloud
There's no chance this is true. It would mean that Gox would have had to have
drained their cold wallet (a manual process) without noticing.

Gox is not particularly competent, but there's no way that happened.

------
letstryagain
Even MtGox can't possibly be that stupid. Losing 9 figures without noticing? I
don't think so.

------
natrius
I think it's a bit far-fetched to claim that MtGox failing is an existential
threat to Bitcoin. Once it becomes widespread knowledge that merchants can
accept Bitcoin with no fees (up to $1M) and get the exact dollar amounts in
their bank accounts, they will accept Bitcoin, and they'll prefer it. Some
will prefer it to an extent that they'll offer discounts for using it.
Consumers will buy Bitcoin in small increments the way they buy gift cards to
get lower prices at grocery store gas stations.

Coinbase or BitPay losing their customers' money would be an existential
threat to Bitcoin. MtGox? Not really.

~~~
unclebucknasty
> _Coinbase or BitPay losing their customers ' money would be an existential
> threat to Bitcoin. MtGox? Not really._

If MtGox was still the massively dominant exchange that it once was, I would
say that it would be at least an equal existential threat to BTC. To this
point, BTC has survived (even thrived) without much use as a payment currency
(relatively speaking). It's been more about trading.

So, to the extent that a MtGox failure is survivable for BTC, it's because
there are now other exchanges with significant market share to support
liquidity and trading activity until its use for payments takes hold (if
ever).

~~~
anigbrowl
_Many individuals grew suddenly rich. A golden bait hung temptingly out before
the people, and, one after the other, they rushed to the tulip marts, like
flies around a honey-pot. Every one imagined that the passion for tulips would
last for ever, and that the wealthy from every part of the world would send to
Holland, and pay whatever prices were asked for them. The riches of Europe
would be concentrated on the shores of the Zuyder Zee, and poverty banished
from the favoured clime of Holland. Nobles, citizens, farmers, mechanics,
seamen, footmen, maidservants, even chimney sweeps and old clotheswomen,
dabbled in tulips._

\- Charles Mackay, _Extraordinary delusions and the madness of crowds_

------
Aqueous
I would wait for validation to act on this. This could be an attempt to drive
down prices.

~~~
Aqueous
Now that a document, real or fake has been posted, the price is going to go
down whether this is real or not.

------
panarky
The second slide shows a timeline[0]. If this is correct, Gox spent the last
two weeks snapping up BTC at a 75% discount to replenish their balances.

I figured as much[1].

If this is even remotely true, no amount of "rebranding" will save them.

Please save us months of drama and be gone.

[0] [http://www.scribd.com/doc/209050732/MtGox-Situation-
Crisis-S...](http://www.scribd.com/doc/209050732/MtGox-Situation-Crisis-
Strategy-Draft)

[1]
[https://news.ycombinator.com/item?id=7211417](https://news.ycombinator.com/item?id=7211417)

------
7c8011dda3f3b
"Update on Mt. Gox: This document appears to be authentic"

[http://two-bit-idiot.tumblr.com/post/77760399932/update-on-m...](http://two-
bit-idiot.tumblr.com/post/77760399932/update-on-mt-gox-this-document-appears-
to-be)

[http://www.scribd.com/doc/209050732/MtGox-Situation-
Crisis-S...](http://www.scribd.com/doc/209050732/MtGox-Situation-Crisis-
Strategy-Draft)

~~~
anigbrowl
8-0

Bonus: download the PDF and change the highlighting page 11 to 20% (or just
change teh color) to look at their internal balance sheet and projections out
to 2016.

~~~
MekaiGS
For easy viewing:

[http://www.muskr.com/MtGoxBalanceSheet.gif](http://www.muskr.com/MtGoxBalanceSheet.gif)

------
ChuckMcM
Wow, that would be, unfortunate if true. Quite the heist though, and yet
perhaps somewhat bittersweet. If it kills BitCoin what was gained by stealing
all that BtC, unless of course killing BitCoin _is_ the gain.

But given the transparency of the block chain, can we re-create the path of
all the malleable transactions? Can we figure out where those coins went?

~~~
mschuster91
MtGox would have to disclose all wallet addrs used for incoming deposits, hot
and cold storage for that.

Given the holy fucking mess they're in already, they should provide full
transparency - i.e. not only disclose the wallet addrs, but also the total
amount of fiat cash they hold and which account ID holds how much BTC/fiat.

That would allow an independent entity to either resolve the clusterfuck
(since obviously MtGox is unable to) or fairly wind down MtGox by evenly
distributing the remaining BTC/fiat amounts, a small amount set aside for some
lawyers to try to unfreeze the Dwolla funds.

~~~
wpietri
I think if they were the kind of people with the discipline and character to
do that, they probably wouldn't be in this pickle.

------
jordhy
While we debate this, the bitcoin price has plummeted to 510 USD.

Meanwhile @twobitidiot maintains the plausibility of these claims. He says
that he will post more information on his feed.

I think we should follow him on twitter to find out more about this situation
and protect our crypto-investments.

If the claims are true, bitcoin could see one of its biggest crashes.

~~~
this_user
The question, as always with markets, is how much of this is already priced
in. The MtGox BTC price has diverged for quite some time and is currently at
$115 which tells me that a lot of people are already assuming a low
probability of ever seeing any of the money in MtG accounts again.

So, basically there are two scenarios and combinations thereof if they indeed
lost all of the coins: 1) Most of a complete loss is already priced into the
general BTC market and nothing much happens. 2) Once this gains more
(mainstream) attention and the general public realises what has happened, the
trust BTC had been able to gain evaporates and there will be strong sell-off.

I don't think it's possible to say which one it will be.

~~~
jackpipe
while there is some default risk (but perhaps not enough?) priced into the
mt.fgox price, the general bitcoin price doesn't appear much affected,
certainly not proportionate to the damage that could be done, or already has
been done, to the whole bitcoin ecosystem.

------
xyzzy123
The actual PDF mentioned in the article has now been posted here:
[http://www.scribd.com/doc/209050732/MtGox-Situation-
Crisis-S...](http://www.scribd.com/doc/209050732/MtGox-Situation-Crisis-
Strategy-Draft)

------
jordhy
This is so sad it hurts. I just hope MT Gox offers a statement tomorrow
probing this false or declares bankruptcy already. They are a shame beyond
words for the crypto community. This must end immediately.

------
trishume
Couldn't this be confirmed or denied by analyzing the blockchain for modified
transactions and counting the volume? Someone already did something similar
and didn't find anything astounding: [http://www.righto.com/2014/02/the-
bitcoin-malleability-attac...](http://www.righto.com/2014/02/the-bitcoin-
malleability-attack-hour-by.html)

------
oldstrangers
If true, perhaps Satoshi could finally come back into the picture and help
save bitcoin with an influx from his massive pile.

~~~
baddox
You mean by giving it to MtGox to keep them solvent? That would be a crazy
day.

~~~
buttsex
I would love to see MtGox given a bailout. So many heads would explode.

~~~
krapp
I've seen so many criticisms of Bitcoin answered with apologies along the line
of "well fiat currency is even worse because corruption/inherently
worthless/monopoly on violence," so I'm sure the true believers will come up
with some way to rationalize it, if it happens, while still keeping a weather
eye out for the revolution.

~~~
baddox
It wouldn't be that hard to rationalize that one. This "bailout" would be
completely different than a publicly funded bailout that wasn't even voted on.

~~~
krapp
Who would be voting on a bailout of Mt. Gox?

~~~
baddox
The obvious difference is that all the funds in this hypothetical scenario
would be coming from Satoshi himself. He can do whatever he wants with his
bitcoins as far as I'm concerned. The bank bailouts were ultimately publicly
funded.

------
unclebucknasty
> _" The likely consequences will be larger than this localized financial
> damage, and we believe that the benefits of keeping MtGox stable and running
> outweigh the risks. This isn’t about saving MtGox anymore.”_

If this is true, then they are literally claiming that MTGox is too big to
fail.

------
mmp47
Comment at mtgox site says now "<!-- put announce for mtgox acq here -->", so
although the document might be true, there are also some positive news coming.

------
Goatish
What is the Mt.Gox memo pdf is cover for a 0 day exploit that hijacks your
BTC, and you just got screwed while scrambling in fear for your bitcoins?

------
mafuyu
All I want is my 0.5 BTC in MtGox back... Doesn't seem like it's ever
happening at this rate.

