

Man Confronts CEO of MT. Gox In Tokyo - richardknop
http://www.coindesk.com/watch-man-confront-ceo-mt-gox-missing-bitcoins/
Also covered by The Wall Street Journal: http:&#x2F;&#x2F;blogs.wsj.com&#x2F;japanrealtime&#x2F;2014&#x2F;02&#x2F;14&#x2F;bitcoin-protester-confronts-mt-gox-executive&#x2F;
======
pavlov
There's still time to get on the bandwagon!

[http://en.wikipedia.org/wiki/File:Flora%27s_Malle-
wagen_van_...](http://en.wikipedia.org/wiki/File:Flora%27s_Malle-
wagen_van_Hendrik_Pot_1640.jpg)

------
lhnz
This should be a warning to anybody that ends up amassing X00K in a digital
currency to be _very very_ careful to keep your money secured and _in your
control._

~~~
coldpie
Suddenly, thousands of Internet libertarians learn the value of regulation.

~~~
gonvaled
You got this backwards: just transfer the bitcoins to your private wallet, and
you have no need _whatsoever_ for regulation.

People keeping their bitcoins in online wallets are trusting MtGox et al. A
libertarian trusts nobody but himself - and specially not the state.

~~~
clavalle
Merely thinking about the absolute lack of trust for everybody and everything
in a Libertarian world, and what that would mean for day-to-day life, exhausts
me.

~~~
gonvaled
Not trusting anybody / anything does not mean that you can not risk a
relationship. It's a cost/benefit analysis. In the case of MtGox, a
libertarian would trust it with a small percent of their holdings, no more.

Because a libertarian recognizes that the world is inherently risky/hostile,
as a basic strategy he is not willing to risk too many eggs on a single
basket. Whatever the basket - specially if it is a basket guaranteed by the
state with a business plan based on a pyramid-scam, like, "we are guaranteeing
all bank accounts although we have absolutely no money to do that".

~~~
clavalle
It is not _a_ cost/benefit analysis. It is an _explosion_ of cost/benefit
analysis. It is replacing a tree structure (government) with a directed graph
with no further constraints (agreements between individuals and groups). Sure,
it is more flexible but at a cost of a huge reduction in efficiency.

That is why it seems exhausting to me. A base level of trust that we rely on
every day, a system of trust that works so well most of the time that we don't
even realize it is there unless we think about it, would not exist.

------
bdfh42
The protagonist felt that his "wealth" was tied up in MT. Gox.

Surely that is/was an illusion. Wealth is rather more tangible than some
encrypted code in (wow this will upset some folks but it is still true) a
glorified ponzi scheme.

~~~
d0
"wealth" is subjective.

For my father it's a Range Rover he can't afford but can show people.

For me it's solving a problem (intellectual wealth).

For him, it's the promise of exchanging some electronic fairy dust for a
different kind.

(all money on this scale is fairy dust and promises which scares me away from
it all)

~~~
bdfh42
A dictionary might define wealth as "an abundance of valuable possessions or
money".

We who are working on start-ups of various kinds, seek wealth for ourselves
perhaps but certainly if we are successful to increase the total wealth of the
world.

At least the fairy dust of the dollar or euro is backed by the wealth of
nations.

~~~
d0
Euros and dollars are backed by guns and ammunition, not the wealth of
nations.

A short peek at history will show you that.

~~~
ItendToDisagree
Agreed! But at one point there was a 'gold standard' which was backed by an
actual thing. Although that thing was to a great extent backed by guns and
ammo as well.

Serious question: Could a 'crypto-currency' run on a gold standard? IE MtGox
(or whoever) having enough of an actual thing to cover all of the coins? I
hadn't thought about that but it is an interesting thought to me.

~~~
trothamel
It wouldn't work in the major current cryptocurrencies, as you'd have to have
some way of mtgox issuing new coins for gold deposits. That would seem to be
against the current sets of rules, which only allow miners to create coins.

I'd assume it would be possible to have a cryptocurrency where a central
authority stores gold/dollars/etc, and allows people to exchange it for coins
and vice versa - basically, have special transactions that can create coins.
Miners would have to mine for transaction fees, or maybe they could be paid
out of the interest produced by the giant money pile.

It would require a lot of trust in the central authority - and once you have
that trust, it's not clear you need a cryptocurrency at all.

------
zwily
Wow, so they can't even process a withdrawal for someone with a big balance
who shows up in person? Sounds scary, like they actually are insolvent.

~~~
samworm
There are very good procedural reasons for not paying out to random people
that turn up at your offices. Try going to your bank's office building (not
branch) and demanding cash. Proper withdrawal processes should be designed to
protect both parties from fraud / risk while remaining convenient.

I'm not saying I think mtgox's actual procedures aren't batshit insane (they
are), but trying (and failing) to operate outside of those procedures doesn't
really prove anything.

~~~
ItendToDisagree
^This is true.

While the attempt to contact the CEO in person does push the issue, it is sort
of ridiculous to think that they keep 'cash on hand' at the office to cash
people out.

As pointed out there are a bunch of reasons to keep withdrawal processes
within process especially with a semi-anonymous currency of this type.

------
gonvaled
Honest question: why are people using online wallets to keep big amount of
bitcoins? Isn't it risky per-se?

And just to make sure I understand this: a personal wallet (in a USB, my
laptop, my dropbox, whatever), would not be susceptible to these risks, right?
(of course, other risks apply, like somebody accessing your wallet, or losing
it)

I guess the users of the online wallets have no direct access to their
wallets, so they can not order a transfer to a private wallet to recover their
money. Probably there is not even a per-user wallet, but a wallet for the pool
of MtGox clients?

~~~
jjoonathan
Liquidity. Offline wallets are risky in that they could delay a cash-out in
the face of plummeting bitcoin value.

------
snorkel
It was nearly 3 years ago when I sensed that Mt. Gox lack of maturity as an
exchange would eventually spell trouble for Bitcoin:
[https://news.ycombinator.com/item?id=2608055](https://news.ycombinator.com/item?id=2608055)

... and 78 days ago I recommended sell your Bitcoin now.

I'm not clairvoyant or an insider, rather I've seen this movie before. It's
called The Bubble. This is the part of the movie where the bubble pops and
remaining investors act all shocked and disappointed.

There was a Dot-com Bubble, it popped, people lost a lot money, but many of
the dot-coms still exist and have grown.

There was a (US) Housing Bubble, it popped, and there's still houses being
bought and sold, just at lower prices today.

... and there's still tulips for sale too.

My point is Bitcoin may still carry on past this episode, but you have to
recognize that its current price is way too heavy to make it over this bridge
without collapsing, and it takes a long long long time for prices to recover
after a bubble pop.

~~~
hindsightbias
IMO, the best indicator for a bubble is when people participating in some
financial activity look at you like you're an idiot when you ask basic
questions and can't explain themselves w/o all sorts of complicated answers
and rationalizations, ultimately followed with "you just don't understand."

I get that there are superpeople who are really that smart, but in my
experience 99% of you are not that person.

The hard part is guessing the limits of irrationality and maximizing your
profits. I got out of the dot-com bubble over a year early.

------
hoopism
We know one thing for sure... the CEO did not steal the bitcoins in order to
invest in proper winter attire.

------
sillysaurus2
After researching the issue for a couple days, I've turned up a few things to
boost my confidence in the situation.

First, Tux (the owner of MtGox) has been participating in the Github
discussion about getting a "normalized txid" implemented ASAP to address the
malleability issue.

Here's the github discussion:
[https://github.com/bitcoin/bitcoin/pull/3656](https://github.com/bitcoin/bitcoin/pull/3656)

Here's the latest comment from Tux (8 hours ago):

 _" Just to update this thread, it seems that this discussion is mostly stale
now. We (at MtGox) will implement this new hash index in our transactions
database and start working with it (we will announce a maintenance as we will
have to stop bitcoin deposits too during the database schema update) and will
start providing this new hash when customers are withdrawing bitcoins,
litecoins, or any other coin based on Bitcoin we may support in the future.

We will also provide an API that will allow our customers to use this hash to
retrieve the transaction hash as seen in the blockchain once the transaction
is confirmed, and will hope others (blockchain.info?) will index this value
one day.

We also invite other exchanges and businesses which may need to keep track of
bitcoins they send to use this same method, since dealing with multiple
variations of the same thing wouldn't be very productive."_

As of an hour ago, blockchain.info has implemented the proposal. Here's an
example of a "normalized txid":
[https://blockchain.info/ntxid/3c0b247b0f9107309c603441f0411b...](https://blockchain.info/ntxid/3c0b247b0f9107309c603441f0411b1e8a54dbbb86c892d0aced6aa285804c7f)

Why is ntxid important? Because for most practical purposes, ntxid cannot
mutate. The recent attack was possible because people were able to mutate
txids by changing the signature. So, "txid" includes the signature, but
"ntxid" doesn't. Therefore ntxid is immune to the previous malleability attack
vectors.

So what else boosts my confidence? Well, another aspect is that Gox support
personnel have been in #mtgox almost 24/7 answering questions. They often
don't have answers that people are seeking, but they have been professional
and helpful to the best of their ability given the current situation.

A third thing that boosts my confidence is that Gox has, conservatively, made
at least 120k bitcoin in profit from trade fees. It's more likely in the range
of 440k. So even if they lost an ungodly amount of bitcoin, such as 70k, they
will still have more than enough to cover the losses.

To expand on this third point, people have expressed at least two concerns
about whether Gox has enough coins. The first concern is whether Gox has
enough coins to cover the losses they suffered. For example, perhaps they've
been paying themselves a massive salary, and perhaps they lost more than the
amount of profit they had remaining. People feel that the press release was
designed to drive down the price of bitcoin, perhaps to sell high and buy low
in order to grow their bitcoins by enough to cover the losses. But this
doesn't make sense, because bitcoin's price rapidly recovered on all the other
exchanges. This method wouldn't have been able to net them more than a few
thousand btc. Plus, their own buy order would influence the price itself. The
logic of "Gox issued an accusatory press release to drive down the price"
doesn't seem to hold up.

The second concern is that people believe Tux will use this as a way to get
out of bitcoin entirely and retire. I don't know Japan's law, but people seem
to believe Gox is the equivalent of a limited liability corp, which is of
course designed to limit personal liability in the event of a massive screwup
such as the one Gox has suffered. People say that since there was no malicious
intent by Gox, then Gox may simply be closed down without much penalty to Tux.

But if that were the case, then Tux's behavior would become very different
very quickly. It seems pretty likely that Gox has, by now, calculated how many
coins they've lost. Tux knows whether they're solvent. If they aren't able to
cover losses, why would he be participating in Github? Why is he seemingly
working so hard to resolve the issue? In that situation, "keeping appearances"
isn't valuable. His time would be better spent speaking with lawyers and
crafting his legal defense. This doesn't seem to be happening.

So at this point we know the malleability exploit was real and that Gox really
was bitten by it. We know they responded to the exploit in the only way that
they were able: by suspending withdraws before further coins were siphoned out
of Gox's systems. We know that Gox aren't making any exceptions to this
withdraw suspension, not even for customers with large bitcoin holdings. (To
me, this seems quite fair.) We know that Tux has been personally working with
the bitcoin devs to push through a proposed fix to the protocol, and we know
that the proposal has already been implemented in blockchain.info's website.

Lastly, and most persuasively, we know that the expected value for Tux to
reopen Gox is the massive amount of trade fees he stands to earn in the
future. This incident will shake people's faith in Gox, but people are fickle,
and if just 30% of their user base sticks with Gox then that means in another
few years Gox will have earned 30% of "a massive amount of profit from the
trade fees." That's still quite a bit of profit, and profit is better than no
profit. Since Gox stands to earn at least another $million USD in trade fees
over the next few years, then that's a million reasons for him to continue
operating the exchange.

Tux's behavior is roughly the opposite of what you'd expect from someone who
was about to shut down their business.

I had the option to sell my bitcoins in my MtGox wallet for 80% of their
value. For example, if I transfer 1 bitcoin from my Gox wallet to their Gox
wallet, then they would send me 0.8 btc to my external wallet address in
return. But I chose not to sell off my Gox bitcoin, because the probability of
Gox closing seems much less than 20% due to all of the above reasons. I'm
going to wait it out.

~~~
smtddr
I definitely don't know how this will all end up. But I get the impression
that if MtGox does collapse, you will be the most emotionally/financially
impacted person on HN. I am absolutely not a Schadenfreude-type person. I'm
rooting for you. Just remember, it's only money. Don't do anything extreme if
this all doesn't work out.

If things do work out(and I hope they do), hence forth you shall always keep
the vast majority of your coins in an offline wallet. :)

~~~
naterator
>If things do work out(and I hope they do), hence forth you shall always keep
the vast majority of your coins in an offline wallet. :)

Or, as any financial adviser worth talking to will tell you, don't keep all
your eggs in one basket. Diversify[1].

[1]
[https://www.youtube.com/watch?v=FTsNEUZx8v8](https://www.youtube.com/watch?v=FTsNEUZx8v8)

~~~
mac1175
LOL! Miss that show!

------
jellicle
Look people. In the world we live in in 2014, financial regulation is low and
headed downwards. Scams are high and rising. Even in traditional banking
industries denominated in dollars, there is no appetite from government (I
will not here go into the reasons) for punishing wrongdoers. Accordingly,
people are behaving rationally and ramping up their cheating and fraud.

In non-traditional industries not denominated in dollars, there is even less
appetite for punishing cheaters and scammers.

Every bitcoin business is a fraud. Every one. There is no one who is planning
to do anything except steal as much money as fast as they can, and then use
the stolen funds to pay some lawyers to "negotiate" if the government shows
any interest at all, which is unlikely. Just tell your lawyer to claim "we
were hacked, we're a victim too". No one can prove that isn't true.

For anyone who is ethically-challenged, this is a great business to get into.

Watching internet libertarians run smack into an entire industry that seems
specifically designed to liberate them from their life savings - with no
recourse - is fucking hilarious.

There are going to be a lot more people wondering where their tulip-wealth
went. The answer - safely into someone else's swiss bank account - is not
going to please them.

Anyone want to start a betting pool on when the first bitcoin-related death
will be? The first bitcoin-bankrupt person assaulting a scammer, or something
like that?

------
haakon
Wall Street Journal covers this:
[http://blogs.wsj.com/japanrealtime/2014/02/14/bitcoin-
protes...](http://blogs.wsj.com/japanrealtime/2014/02/14/bitcoin-protester-
confronts-mt-gox-executive/)

------
Cthulhu_
Isn't it MtGox? Not 'mount Gox', sillies.

~~~
michaelhoffman
The logo on mtgox.com is "MT.GOX"

------
Keyframe
That's one of the downsides of unregulated market. I'm not saying it wouldn't
happen in regulated market, it would be less likely.

~~~
boon
1\. It's not completely unregulated. 2\. If you think a highly regulated
system works better, just google "jon corzine mf global".

~~~
300bps
Bernie Madoff, Worldcom, Enron, Lehman Brothers, etc, etc.

------
carsonreinke
Why is the CEO in a T-Shirt?

~~~
serf
You're asking that on HN? Isn't this the t-shirted-ceo capital of the world?

(for what it matters, I share your sentiment.)

~~~
carsonreinke
It was snowing, don't you find that a bit odd?

