• Flattr FoI: 
Falkvinge &Co. on Infopolicy
BEFORE-FALKVINGE-IF-ANY FALKVINGE &CO. ON
INFOPOLICY
Falkvinge on Infopolicy - Home
»
simple combination keycode

The Gox Crater: Crowd Detectives Reveal Billion-Dollar Heist As Inside Job

141

Cryptocurrency

Cryptocurrency

Thousands of volunteering and self-organizing detectives have been meticulously laying a puzzle that reveals the Gox billion-dollar heist as an inside job. As smoke clears on the implosion of the Empty Gox bitcoin exchange, thousands of people in the community committed to revealing the truth behind the stonewalling exchange. What was claimed first to be a technical problem, then an outside theft, has been conclusively determined that the MtGox management knew too much, too long ago, to have this be an ordinary case of theft.

There are still many question marks remaining surrounding the missing 744,408 bitcoin at Empty Gox, valued at their peak to just under one billion US dollars, and which are well north of that in replacement value on the open market today. What’s becoming clear, though, is that this wasn’t a theft that properly shut down operations as soon as it was discovered. Instead, Empty Gox and its CEO Mark Karpeles appear to have attempted to benefit and profit from it. That would cross the line into criminal complicity, even if they were not part of the original loss – something that also remains an open question.

At this point, there are two outstanding principal questions:

  1. Who took the money?
  2. When was the money taken?

Let’s address the second question first and get the timeline in order, because it completes a lot of the puzzle. I have written before that it would be absolutely impossible to not notice the loss of one billion dollars from company assets, unless you were actively cooking the books to hide a gaping hole where a billion should have been. As it turns out, it seems such fraudulent cooking is exactly what has taken place.

An attempt at a timeline

Many different people have been working diligently to put together a timeline of events. Here’s an attempt to summarize the most important and credible ones.

June 2011 – the first possible time when the bitcoin in question might actually have disappeared (Jesse Powell). If true, Empty Gox has been operating with a lack of assets since, attempting to gradually cover the huge hole in its assets though operating profits. This would explain why there aren’t any books or balance sheets at all (Roger Ver), since making them would disclose the empty vault. Obviously, failing to disclose this would probably be at least criminal neglect toward shareholders, and quite possibly toward financial authorities as well.

June 23, 2011 – Under pressure to prove solvency, Karpeles moves a very specific huge amount of money (424,242 bitcoin) from one wallet to another. Thus, we know that he was in control of the target wallet of this transaction at this time, and can trace the funds forward from that point in time.

May 2, 2013 – Empty Gox was sued by CoinLab for 75 million USD for breach of contract. For unknown reasons, Gox failed to fulfill obligations to provide server access, resulting in a startup-crushing financial liability for failing to deliver. (Rob Banagale)

(Interestingly, there’s a massive selloff of 750,000 coins at an average price of about 100, totalling $75M, just following this event, suggesting customer coins were fraudulently sold to cover Gox liabilities. However, such a move wouldn’t make sense from a funding perspective, as it doesn’t change the amount customers have deposited in the exchange – if there was $75M deposited already, that could be used directly without a selloff; if there wasn’t, it would not magically appear because Gox sold customers’ coins on their own exchange.)

Summer 2013 – First Gox competitors get a significant foothold in the exchange market. Trading volume at Empty Gox, and therefore income from commissions, drops to one-third of pre-April levels.

August 2013 – First rumors that everything isn’t financially well with Empty Gox. Trouble with US Dollar withdrawals due to August 13 seizure of funds by US government. Nothing solid at this point, but in hindsight, this is when the game of musical chairs started (Weiner). The fractional reserve that was initiated some time 2011 has been holding up until this point.

September 10, 2013 – Empty Gox countersues CoinLab for five million US dollars in cash, which appears to have been withheld by CoinLab for some reason in a way Gox didn’t agree with. That would indicate Gox is now very short on cash. (Banagale)

October 20, 2013 – First report of a withdrawal from Empty Gox that didn’t go through, like an ATM executing a withdrawal but not dispensing any money. The stuck withdrawals are technically diagnosed by the community to be caused by an attempt at Empty Gox of spending the same money twice, which suggests that the Gox software believes it has money that it actually doesn’t. This is the date when Empty Gox management, at the latest point possible, must have been acutely aware that it was unable to serve withdrawals due to lack of funds. (Bryce Weiner)

November 26, 2013 – Last known transaction of the chain directly descending from the proof-of-solvency in June 2011 (easily manually traceable). On this date, Gox was able to access the cold storage that was used earlier, at least partially negating a “lost keys” theory.

December 2013 – People’s Bank of China announces an end to Chinese bitcoin trading by February 1, 2014. This causes Chinese to withdraw from Empty Gox in large numbers, depleting the reserves.

January 2014 – I try to empty my account at Gox. Bitcoin withdrawals are not coming through. It’s like emptying your account at an ATM but only getting dispensed a fraction of the money out of what was listed as withdrawn. Still not a large issue in the forums; you have to dig deep to find some technical discussion threads analyzing the withdrawal problems. Complaints to Gox get answered well after a week, at which point the balance is restored, and new withdrawals fail the same way. Rinse and repeat.

February 1, 2014 – Following the People’s Bank of China edict that times out on February 1, the amount of stuck withdrawals at Gox goes stratospheric enough for independent people to start tracking them on charts for debugging purposes.

February 4, 2014 – I publish my “38 million dollars missing at Gox” article, which is the first article to convert the question from a technical to a financial one, as far as I know. Several people would contact me after that article and hint that the situation was much worse than I could imagine.

February 7, 2014 – Gox shuts down bitcoin withdrawals entirely, citing technical problems and promising more information on February 10, a Monday.

February 9, 2014 – First recorded event of a so-called “transaction malleability attack” against the bitcoin blockchain, which Gox will blame the following day for all its ongoing problems. This contrasts with the fact that failed withdrawals occurred as early as October 20, 2013. (Weiner)

February 10, 2014 – Gox issues a press release explaining their halted withdrawals blaming problems with the bitcoin protocol as such, due to so-called “transaction malleability attacks”, and that they are working to solve the problem. This is immediately identitied as technical bullshit by a number of heavy names, plus myself.

February 15-17, 2014 – Empty Gox issues various “we’re working on it” updates, and gradually shuts down the exchange further, halting trading for six hours on February 15 for alleged maintenance and debugging. Gox promises an update on February 20.

February 19, 2014 – Gox moves to new offices according to a press release. The new address is a small virtual office in a rent-a-room business building in Tokyo, Cerulean Towers. Many in the community question the timing – you don’t move offices in the middle of a company existential crisis.

February 20, 2014 – Empty Gox issues a non-update to the situation, blaming delays caused by the office move, not giving a date for when its next update will follow. A few hours prior, there had been a massive selloff of coins on Gox, sending the price from $300 to $150, strongly suggesting insider trade (read: obviously showing).

Through February – People observing Gox actions remain hopeful at the slightest activity that things will sort out well in the end; some technical developments do take place. Meanwhile, the exchange rate of bitcoin tanks, especially on Empty Gox which is now isolated from the rest of the bitcoin economy. The exchange rate plummets from $1,000 per coin to sub-$100 per coin on Gox, and to about $600 on other exchanges. Allegedly, Karpeles is acting to profit personally from this difference in price, which is directly caused by his own mismanagement and shareholder deception, through active arbitrage (Selkis).

…Karpeles knew about the pervasive damage of the transaction malleability attacks for several weeks and was engaging in an arbitrage scheme that leveraged the depressed Mt. Gox price to reap gains on other exchanges. This was allegedly happening well before [February 25].

February 24, 2014 – A crisis strategy draft leaks, courtesy of Ryan Selkis, that indicates there has been a leak from Gox’ cold storage, leaving a hole of 744,408 bitcoin. As Andreas Antonopoulos points out, a “leak” from “cold storage” is a contradiction in terms: that means it either wasn’t a leak or it wasn’t cold storage. This document makes it clear that Empty Gox management knew that the problem wasn’t technical, and that they knew well what was going on:

For several weeks, MtGox customers have been affected by bitcoin withdrawal issues that compounded on themselves. Publicly, MtGox declared […technical problems with the bitcoin protocol…]. […] The truth is that the damage had already been done. At this point 744,408 bitcoin are missing…

February 25, 2014 – Empty Gox website goes completely blank. The music stops. This is consistent with the timeline presented in the “Crisis Strategy Draft” leaked the day before. The bitcoin exchange rate plummets to $400 per coin.

February 26, 2014 – The exchange rate of bitcoin has recovered completely from the shock of Empty Gox closing, back up to $600 per coin. Erik Voorhees notes that the bitcoin price fell less after the Gox implosion than the US equities fell after the Lehman implosion, which puts things in perspective. (Voorhees)

February 26, 2014 – Mark Karpeles posts a statement on the Gox website stating he is still in Japan and working to resolve the “recent issues” (see screenshot).

February 27, 2014 – Mark Karpeles’ neighbors say he moved out of his apartment in Tokyo a month ago (Kolin Burges).

February 27, 2014 – The 2014-2017 business plan of Gox leaks, courtesy of Ryan Selkis. It confirms the leaked document from February 24, and notably lacks any balance sheet. It reads very much like a prospectus aimed at courting buyers.

February 28, 2014 – Empty Gox files for bankruptcy protection, according to the Wall Street Journal (breaking at the time of writing).

This timeline, when seen from a zoomed-out perspective like this, paints a clear picture of a company – or at least a management – that was well aware of an insolvency, trying to actively deceive the community and shareholders, and profit personally from doing so.

Who took the money?

So, the trillion-dollar question: who took the money? Strictly speaking, we don’t know that yet. We’re talking about a sum of money so large that “humongous” and “enormous” aren’t sufficient to describe it – it’s 6% of all bitcoin in existence, and assuming bitcoin keeps growing to its potential, that means one individual is sitting on 6% of the world’s future trade and retail currency supply. In today’s USD value, such an amount would be on the order of 20 trillion US dollars, or roughly 250 times the fortune of today’s richest billionaire. It’s not exactly hard to see a motive here.

If this happened in the 2011 hack, then frankly, we have no idea. There are rumors floating around that Karpeles just lost the keys to the vault, that Gox has money stashed away, that the billion dollars are “temporarily unavailable”, and while an admirable theory to get hopes up that those keys may be found again, the zoomed-out picture says very clearly no such thing has happened. Somebody managing a company like this and treating it like his personal toy would have a personality that could well hint at all the money being just around the corner if you would only make a few more trades, acting just like any Prince of Nigeria. There is also unconfirmed research suggesting that Karpeles is in personal control of a very large amount of bitcoin (about 90,000) once used in the operations of Empty Gox; this research can be expected to be peer reviewed over the coming days. But no matter whether Karpeles personally robbed Gox blind, or profited personally on continuous deception from somebody else doing so in 2011 while deceiving clients and shareholders, it is clearly over the line into criminal territory and definition of an inside job.

In order to further boost hope in returning the money, there have been rumors of a buyout, apparently planted by Karpeles himself. Such rumors, getting hopes up that the client funds would be restored, turned out to be nothing but delusional bailout dreams from CEO Karpeles, as I predicted in my last article – while I understand the hopes of a competent management buying Gox, as I wrote, that’s a contradiction in terms. No competent management is going to go anywhere near this toxic crater. Instead, as revealed by bitcoin entrepreneur Ryan “Two-Bit Idiot” Selkis, once the businesses thus approached understood the magnitude of fraudulent mismanagement, they immediately notified authorities.

The silence from MtGox in general and its CEO Mark Karpeles in particular is stunning – and concerning – in this situation. A billion US dollars of clients’ money is missing, and the only public statement amounts to “stop asking us questions”.

In what must surely rewrite the handbooks for the entire field of Public Relations, MtGox' trailblazing handing of public concerns over the missing billion dollars at this point amount to "stop asking us questions".

In what must surely rewrite the handbooks for the entire field of Public Relations, MtGox’ trailblazing handling of public concerns over the missing billion dollars at this point amounts to “stop asking us questions”.
(Screenshot of mtgox.com, taken early morning on February 28, 2014.)

In the first and only interview so far after the still-officially-unexplained shutdown, which has already led to multiple tragic suicides over the loss of fortunes, CEO Mark Karpeles responded to questions with a picture of his cat. This means that the communications skills from MtGox and Karpeles are either so carefully orchestrated here that only an experienced genius would understand them, or so incompetent that it falls below any description. Take a guess which is more probable.

According to research by Bryce Weiner, Karpeles himself is the person who took the funds, and this happened in 2011, which would be consistent with the observation by Jesse Powell (Weiner): “There’s nothing to indicate that Empty Gox was ever solvent.” While the timeline doesn’t conclusively show that Karpeles himself is behind the original disappearance of funds, it does show clear complicity in profiting from the heist.

As this article is almost finished, the Wall Street Journal reports that Empty Gox has just filed for bankruptcy.

Copycat Scam?

According to an anonymous high-profile source, the first and original bitcoin scam was the online coin wallet Mybitcoin.com. People would deposit hundreds of thousands of coins there, as the currency was new and hundreds of thousands of coins weren’t yet worth a lot.

Then, on July 29, 2011, the site went blank, just like the Gox website did. People panicked and gradually accepted a catastrophic loss of funds.

On August 11, 14 days later, the site came back online and declared – just like Gox – that they “had been hacked”, had filed for bankruptcy protection, just like Gox, but “had managed to recover” 49% of the funds. People could fill out claim forms to recover these funds – 49% of their original balance. As this was enough time for most people to internalize the loss, they were happy again at the sudden windfall; things suddenly weren’t as bad as they had seemed. In the meantime, the anonymous person who ran mybitcoin.com disappeared with a huge amount of money, according to the source.

In other words, the scam cynically exploited people’s loss and grief to actually make them happy when they got something back. Most “hacks” of bitcoin sites since then have actually been copycat scams of mybitcoin.com, again according to this source. If – repeat, if Empty Gox is executing a copycat scam, we should expect the site to offer their clients a portion of the holdings back, a portion probably lower than 50% (just to drive the point home), and that offer should appear on or about March 11, 2014. Time will tell.

The one key difference between mybitcoin.com and MtGox would be that Mark Karpeles is not anonymous, which would make for a very poor execution of a copycat scam.

Live Updates Below

Jul 16 18:52 - According to Associated Press, Assange’s lawyers (Thomas Olsson and Per E Samuelsson) will appeal today’s verdict.

Jul 16 18:41 - The official verdict from the Stockholm District Court, in English, is here.

Jul 16 18:39 - (No more news from today’s hearing. Liveblog ends.)

Jul 16 18:14 - It would increasingly appear as though Julian Assange’s actual crime was “pissing off the United States”, just like the operators of The Pirate Bay. The Defense was walking all over the Prosecution in this hearing, literally quoting chapter and verse to show on the record that they are – and I am not exaggerating – criminally lazy on the job.

Jul 16 18:08 - VERDICT: Julian Assange is to REMAIN in detention in absentia. Just announced.

Jul 16 17:28 - According to side-channels from the Court to Swedish media, the verdict will probably be further delayed: “18:00 at earliest”. This is, of course, just a qualified guess.

Jul 16 17:20 - It’s also important to remember that a lifted detention in absentia does not, repeat not, mean a closed or dismissed case. It does, however, mean that the Prosecution will have to deal respectfully with Assange without being able to restrict his movement in the continued investigation. If there is any.

Jul 16 17:18 - The press conference has still not started, despite being announced to start at 17:00.

Jul 16 17:17 - It’s been my consistent impression that the Defense was just steamrolling all over the Prosecution in this hearing. But this is a political trial, and I’ve seen those before. In those, common sense don’t apply, and the victor can be predetermined and therefore spit gibberish in the hearings if they like, they’ll still win.

Jul 16 17:14 - Regardless of appeals, if this court lifts its previous detention in absentia, it’s undoubtedly a brighter picture even on appeal. Still waiting for a verdict.

Jul 16 17:12 - It’s unclear whether and how this verdict (continued or discontinued detention) can be appealed, considering the Stockholm District Court issued the detention in absentia in the first place. If the same court lifts its previous order, how can that be appealed, and what are the precise mechanisms? Unsure.

Jul 16 17:08 - Press conference in Stockholm District Court, announcing the verdict, is about to start.

Jul 16 16:48 - Hearings are over [as of about 16:20]. The court closes its doors for deliberations.

Jul 16 16:48 - Prosecution, final statement: “The European Arrest Warrant did in no way prevent Assange from coming to Sweden. Quite the opposite, it would have made sure he traveled to Sweden. While this may have been a question of form and comfort rather than actual destination, the EAW did not prevent Assange from traveling to Sweden as such.”

Jul 16 16:46 - Defense: “This case also breaks three other Swedish judicial principles. One, use of force must not only be necessary and in the public interest. Two, it must also be effective, and the use of force must cease when it is no longer effective. In this case, the rules say, the detention shall – shall – be lifted. There’s also the question whether a continued detention is even legal. The court approved a detention because of a flight risk, which was a legitimate reason. However, we know now that this is no longer valid. It cannot be effectuated. The only reason for the Prosecution to keep him detained at this point is to pressure him into abandoning his right to asylum – and this is not legal. Detention may never be used against a defendant to force them into admitting guilt or to make them surrender rights. Third, the proportionality principle: no matter what happens, a continued detention has no positive effects for the Swedish state nor for this case, but it has enormous negative effects for Assange.”

Jul 16 16:46 - Defense plays back clips from Fox News and other channels with political commentators stating Assange should be assassinated, calling him a terrorist, an enemy of the state, his organization a “weapon of mass destruction”, illustrating a clear and present danger to his person justifying political asylum. Defense argues that this shows clearly that Assange needs to exercise his political asylum, without that action being motivated by evading Swedish law. [UPDATED: Added link to video shown by Defense]

Jul 16 16:46 - Defense: “I’d like to play back this clip.” / Court: “That’s not possible. There’s a sound cable missing. Defense didn’t inform they’d be playing sound, just video.” Court starts digging through drawers looking for a sound cable for several minutes.

Jul 16 16:45 - Defense: “In an excerpt from Ecuador’s granting of asylum … it becomes clear that Ecuador is protecting Assange from Sweden, the United Kingdom, and Australia, from persecution in the United States. This has absolutely nothing to do with a Swedish legal case. The conclusion is that the assertion from the Prosecution that Assange only has himself to blame is nonsense on a pure legal basis; there are good reasons for political asylum which Ecuador has listed.”

Jul 16 16:45 - Defense: “In the UN Declaration of Human Rights, it’s clear that political asylum is not just a right to apply for, but also a right to enjoy and exercise, once granted. It’s absolutely clear that Prosecution’s points are in complete violation with international law.”

Jul 16 16:45 - Defense: “Applying for political asylum – is this even something reasonably encompassed in the concept of flight risk? First, you have to separate the application for asylum, and it actually being granted. If somebody is actively evading the law on their own, that’s one thing, but this is not what’s happened here. Assange can’t give himself this asylum. Prosecution is plain wrong in saying Assange did this on his own. He applied for political asylum, but a sovereign country granted it to him. That’s a legitimate mechanism. Granting somebody asylum can’t with any reason be construed to aid and abet a fugitive, of being a flight risk in the legal sense. International law requires respect for the institution of political asylum.”

Jul 16 16:44 - Defense: “Then what legal relevance does it have where the fingers are pointed? Prosecution is pointing at Assange, who applied for political asylum. We’re pointing at the Prosecution. It’s the Prosecution who have a duty under law to be active in an investigation, and not the defendant.

Jul 16 16:44 - Defense: “By staying in the embassy, Assange has evaded British police and prevented effecutation of the detention, claims the Prosecution. He has chosen to stay in the embassy, they say. I’m not yet at that point, at proportionality. Rather, does the Prosecution have a legal right to stay passive? The answer, legally, is no. Prosecution is breaking the law in their handling of this case.”

Jul 16 16:44 - Defense: “The prosecution is actively choosing to refrain from completing the investigation, with the justification that “Assange must come to Sweden for a trial or jail anyway” — this is a behavior that’s disgraceful for the Prosecution. This is not up the Prosecution. A sentence is communicated by a Court, and not by the Prosecution.”

Jul 16 16:44 - Defense: “Since Assange has been granted political asylum, force can no longer be applied. The Court must lift the detention, and thereby force the Prosecution to move ahead with the investigation as a case where the defendant has freedom to roam.”

Jul 16 16:43 - Defense: “What else? Well, this weakens the Defense, too. Björn Hurtig asked for hearings in London in fall 2010. We asked the same July 4 2012 in a mail, and repeated it in an in-person meeting. If the Prosecution had done what they were legally obliged to do all along, we [the Defense] would also be able to see the entire case by now. The behavior of the Prosecution is damaging the ability for Assange to mount a legal defense, which is his right. Passivity on the behalf of the Prosecution is not acceptable.”

Jul 16 16:43 - Defense: “Hearings must be held in a time and place which brings the least inconvenience to the heard, unless there is significant danger to the investigation. This is a hard and fast law, and it is no secret at all where Assange is located. Prosecution is choosing to break this law.”

Jul 16 16:43 - Defense: “This investigation is in the exact same state today, in 2014, as it was four years ago, in 2010. This can lead to one or more hearings. But it’s not a complex investigation. After this hearing, it’s time for the Prosecution to decide whether to press charges or not. The fact that this has not moved at all in four years is due to the facts that Attorney Olsson [the other defense attorney] just enumerated: detention for one and a half years, and a political asylum with deadlock for two years. We are at a de-facto deadlock. The only action Prosecution intends to take is to wait out the arrest warrant and wait for Assange to be brought to Sweden. My question to this court: is the Prosecution even formally allowed to just sit down and wait, doing nothing? The response is a clear and resounding NO: This kind of passiveness is not allowed beacuse of actions on behalf of the defendant, in particular not within their legal rights. What duty does the Proseuction have to drive the investigation forward, rather than staying passive, offering nothing but a continued deadlock? Who bears the responsibility? The Court must carry this responsibility, for the Prosecution has shown no intention whatsoever to execute anything but passiveness in this case. The basic fault in the thought process with the Prosecution is that they’re just pointing fingers and find it possible to sit down and do absolutely nothing, which is in violation of the right to a speedy trial [“skyndsamhetskrav”] in the law.”

Jul 16 16:43 - Court has resumed [at 15:20]. Because of connectivity issues in the courtroom, the timestamps won’t match – they’re spread out from 15:20 onward, in reality. They’re posted after recess because the courtroom prevented mobile phone signals.

Jul 16 14:59 - The court takes a twenty-minute break.

Jul 16 14:59 - Defense repeats earlier points that Prosecution must have understood that Assange can’t stay in Sweden forever, and that Assange can be hard to reach, and hammers home the point that absolutely nothing in this justifies the use of force that Prosecution has applied.

Jul 16 14:58 - Defense: “There’s a completely unreasonable dragging-out of time here, causing significant harm to Assange. It has been in everybody’s interest to just go there and hear him, but this hasn’t even been tried.”

Jul 16 14:57 - Defense accuses Prosecution of being plain lazy in not going to London to hear Assange. “It’s too much work.”

Jul 16 14:56 - Defense compares to a case where somebody was suspected of genocide, a much more serious crime, and had been detained for three years. This had been appealed to the European Court of Justice, and after three years, the case was dropped because the defendant had not had a speedy trial. This case has now dragged on for three and a half years. “If he hadn’t complained to the ECJ, he wouldn’t have been detained for three years, so it’s his own fault”, by the Prosecution’s logic. However, the Supreme Court is brutal in its verdict that a person exhausting their legal options cannot and must not be held against them.

Jul 16 14:52 - Defense: “Assange was granted political asylum by Ecuador on August 16, 2012. There has been a clear and present danger in the form of threats from the United States, ranging from extradition to plain assassination and execution. The United Kingdom is bound to respect Ecuador’s asylum. Assange has been on the Ecuadorian embassy since June 19, 2012, which has cost the British [enormous amount] and which the British is starting to consider Sweden liable for. In all this time, Assange has not even been able to go outdoors, something normally considered a human right – even detainees in jail are given outdoors time. However, since Assange has shown no intention of surrendering his asylum, there is no purpose to continued detention: it serves no purpose and must therefore be lifted. Assange has a full legal right to maintain his political asylum, and therefore, the detention serves no further purpose. This has now dragged on for three years and six months. In this time, in all this time, Assange has been restrained in various ways, everything from jail to something resembling a permanent house arrest.”

Jul 16 14:47 - Defense: “During these one and a half years, Assange has not been able to maintain a normal life. This is not a British citizen but an Australian citizen. He has been unable to have an income, unable to keep in touch with his family. He has been trapped in a foreign country, unable to fulfill professional or social obligations. Prosecution has used very unusual force in locking Assange in London in this way.”

Jul 16 14:45 - Defense: “During these one and a half years, Assange’s freedom was severely restricted: he was unable to travel, unable to see his family, and unable to have an income, and this was solely use to Prosecution’s actions and use of force. It is clear to the Defense that the Prosecution has been obligated to go to London and hear him: Assange has been unable to travel to Sweden because of Prosecution’s very actions. Defense refers to a case where the prosecution says it’s “impractical” to hear a defendent abroad, coming across as plain lazy. This case was struck down by the Supreme Court for the specific reason that the defendant had repeatedly invited Prosecution to hear him on location. Defense draws clear and direct parallels to this case, except this case is much more serious with disproportionate effects.

Jul 16 14:41 - Defense: “On December 7, Assange was apprehended and detained in London. From December 16, he was electronically shackled with an obligation to report daily to a police station. He was in partial house arrest. He had had his passport rescinded, and had been ordered by a court to not acquire travel documents. So from December 7, 2010, until June 14, 2012, Assange had no practical possibility of coming to Sweden for a hearing. Prosecution’s argument that Julian could have let himself be arrested is nonsense; an accused always has a right to exhaust their legal options, and this must never be held against them.”

Jul 16 14:39 - Defense: “There has never ever been a statement from Assange to refuse a hearing.”

Jul 16 14:37 - Defense: “It’s easy to see, looking at the time frame leading up to September 27, that Assange has showed up to a hearing, has stayed in Sweden, has asked the prosecution whether there would be a problem leaving Sweden, and that Assange could not stay in Sweden indefinitely waiting for whatever the Prosecution was doing. Nowhere here is there anything constituting anything resembling a flight risk (in the legal sense). Also, there was nothing preventing Prosecution and Assange to agree on a date for a hearing, and there was a tentative date set in October. It’s correct that it was hard to reach Assange. But this was a PRACTICAL matter, which does never constitute a flight risk. Flight risk must be based on intent of flight, not practical difficulties.

Jul 16 14:34 - Defense: “Assange leaving Sweden on September 27, 2010 was planned well in advance and was based on a planned keynote in Berlin, and was not related to this case or any imaginary flight risk.”

Jul 16 14:33 - Defense enumerates the threat situations against Assange, and shows an article from [UPDATED:] Washington Times with the headline “Assassinate Assange”, with his face against a target with blood spilling out the back of his head. Defense argues that it’s beyond a shadow of a doubt that there is a clear and present danger against Assange’s person, and that he has reason to fear being abducted to the United States and fear for his health, liberty, and even life. By reason of this, Defense argues, Assange has a good and valid reason to be careful to announce his whereabouts at all times, and that this had absolutely nothing to do with this case. [UPDATED: Clarified “American media” to “Washington Times”, which was named in hearing and stated to be a well-known publication; linked to article and its graphics; and added “blood out the back of his head” describing graphic, which was said in hearings but not initially noted here]

Jul 16 14:30 - Defense: “One can clearly see that when these charges were filed, including when the decision was made to re-open some dismissed charges, Assange was visiting Sweden. He’s an Australian citizen and well known; it comes to a surprise to no one that he does a lot of travel and works internationally. Therefore, it’s unreasonable to assume that Assange had no need whatsoever to leave the country to do ordinary work. Still, Assange deliberately chose to stay in Sweden and showed up to the first hearing on August 30 [2010]. He shows no flight tendencies whatsoever. After that point, Assange stayed in Sweden until September 27. There were a few contacts between Prosecution and Defense in this time frame, when Defense asked if there was anything preventing Assange from leaving the country. Therefore, Prosecution was well aware that Assange had an interest in international travel.”

Jul 16 14:27 - Defense: “Prosecution hasn’t taken any action that would indicate this is a matter of a serious nature. Even if there would be a public interest to theoretically move ahead with all charges ever filed, the nature of this case clearly shows that the ends can’t justify the means.”

Jul 16 14:25 - Defense: “As for how these allegations were originally filed, there are considerable irregularities. The intention of the original accusers were NOT to press charges but something completely different, and there is considerable doubt whether the alleged actions even constitute a criminal act.”

Jul 16 14:24 - Defense: “As for the flight risk: this may be acceptable as an argument in the general case. However, in this case specifically, there are several facts talking against a public interest of allowing any means imaginable to conduct this investigation, in particular the unacceptable time elapsed. First, the allegations are not one of the more serious crimes in the Swedish Law. We’re not talking about murder, genocide or terrorism. The Court must consider that the severity of the alleged crimes presented by the Prosecution is limited, and can’t justify any arbitrary use of force against a suspect.”

Jul 16 14:21 - Defense: “The third principle is the principle of expedience, saying that any accused has the right to a speedy trial. These three principles are pillars in a democratic state. Putting a suspect in detention during the entire investigation would be considered by many to be considerably more use of force than sentencing somebody to jail following a trial – and, importantly: detention is only allowed to be used as an exceptional tool. It is not allowed to be used to be used by Prosecution and Police as a general rule or to get less work.”

Jul 16 14:19 - Defense criticizes Prosecution that any unclarity must speak to the favor of the defendant, rather than in favor of use of more force.

Jul 16 14:18 - Defense criticizes Prosecution that they haven’t justified how a continued detention remains in the public interest (European Convention on Human Rights specifies that a restriction in freedom must be necessary, effective, and proportionate).

Jul 16 14:17 - Defense calls on European Convention on Human Rights point 5.3, the presumtion of innocence.

Jul 16 14:17 - Defense: “There are three principles here. The necessity and proportionality principles, being applicable on the detention themselves, but also on the effectuation of this detention. Defense argues that you can’t effecutate a detention by any means available [letting the ends justify the means] but must evaluate whether the means applied must be evaluated whether they are proportionate to the presumed gains.”

Jul 16 14:15 - Defense: “We claim this detention must be lifted. Is it reasonable to keep Assange detained given these circumstances? Prosecution brings up three issues, and in combination, Defense means they lead to unreasonable consequences. The first is the time passed. In Assange’s case, it’s the lack of progress in the case that has the real effect [and not an arbitrary day count in jail]. The second is the effects to Assange’s personal situation and the restrictions on his freedom, in real effect. The third is how the case has been handled by the Prosecution, and specificially, the Prosecution’s refusal to go to London to hear Assange.

Jul 16 14:12 - Defense opens.

Jul 16 14:12 - Prosecution compares to other cases which appear peripheral to the argumentation. Prosecution closes: “There are no reasons whatsoever to re-evaluate this detention. There is a clear and present flight risk and we don’t consider a continued detention disproportionate.”

Jul 16 14:11 - Prosecution: “We do not consider a continued detention disproportionate. Assange has not been formally detained more than ten days; he has chosen to restrict his own freedom over and above in Ecuador’s embassy in London, but we argue that the time detained should count as the ten days in British jail. His time in the embassy is not a restriction of freedom effected and under control of the State.”

Jul 16 14:09 - Prosecution: “We have tried the question of hearing Assange in London and dismissed the idea as not effective.”

Jul 16 14:08 - Prosecution: “We would not be able to conduct a secure and just investigation, were we to go to London to conduct the hearings.” Prosecution compares to a case where they did go abroad, which was a case concerning economic crime.

Jul 16 14:06 - Prosecution: “There are several reasons we haven’t made hearings in London. This kind of allegation don’t work well for leaving public defenders or prosecutors on foreign soil, and we can’t apply force for taking DNA samples and similar if we consider it necessary. Besides, we can’t hold a trial in London. We’ve re-evaluated this continuously.”

Jul 16 14:04 - Prosecution: “We have exhausted everything speaking in favor of the defendant. There’s nothing we’re withholding from his lawyers in that regard.”

Jul 16 14:02 - Prosecution appears trying to define political asylum as a “flight risk”.

Jul 16 14:02 - Prosecution: “We are arguing that Assange has deliberately refused to come to Sweden for this hearing … and have learned that Assange has no intention of coming to Sweden to such a hearing … which we consider to fill the definition of a flight risk.” Prosecution handwaves and tries to diminish a point of proportionality, which the defense will probably pounce on.

Jul 16 14:00 - Prosecution talks about the possibility of traveling to London to hear Julian Assange. “We didn’t know where he was until December. We also tried repeated attempts to contact Assange through his lawyer, Björn Hurtig. This led to prosecutor Marianne Ny detaining Assange in absentia on Sep 27 2010.” … “These statements that the Prosecution has failed trying to hear Assange are forcefully refuted.” … “Detaining in absentia appeared as the only way to proceed with the investigation.”

Jul 16 13:57 - Prosecution begins talking about “risk of flight”.

Jul 16 13:57 - “The negotiations are now public again.” We are let back into the room. Guards remind us that no recording of sound or video is permitted.

Jul 16 13:56 - It’s been over 30 minutes since the doors closed when the defense wanted to show something on-screen, after the first few minutes where the court just exchanged opening pleasantries. The effect of today’s proceedings remains uncertain: if the detention in absentia in Sweden is lifted, that’s one thing, but what’s keeping Julian Assange locked into a room in an Ecuadorian embassy is an Interpol Red Notice. In other words, the internation arrest warrant must be revoked, which is a separate step from lifting the Swedish detention. Will the Prosecution do that if they lose today’s proceedings? They would be supposed to.

Jul 16 13:55 - It’s been over 30 minutes since the doors closed when the defense wanted to show something on-screen, after the first few minutes where the court just exchanged opening pleasantries. The effect of today’s proceedings remains uncertain: if the detention in absentia in Sweden is lifted, that’s one thing, but what’s keeping Julian Assange locked into a room in an Ecuadorian embassy is an Interpol Red Notice. In other words, the internation arrest warrant must be revoked, which is a separate step from lifting the Swedish detention. Will the Prosecution do that if they lose today’s proceedings? They would be supposed to.

Jul 16 13:47 - Still waiting. More nothing.

Jul 16 13:39 - We’re still waiting outside of room 27. There are quite a few reporters here talking to members of the public, including from the large news agencies. They’re typing a lot on laptops, despite oxygen-starved standing room only.

Jul 16 13:30 - We’re still standing outside room 27 with no sign of what’s happening behind closed doors.

Jul 16 13:22 - We of the public are standing waiting outside room 27 in the Stockholm District Court.

Jul 16 13:20 - Network is painfully inadequate. (Testing.)

Jul 16 13:19 - Before the doors closed, prosecutor and defender presented their respective stances. No surprises there: Defense; “we call for the detention of Julian Assange to be lifted, effective immediately”. Prosecution: “We object to this motion and call for its dismissal.” After that, the defense wanted to “show something” on-screen, at which point the court closed its doors to the public. This is not unusual for sensitive parts of trials dealing with privacy-sensitive material.

Jul 16 13:14 - Parties greet each other. The court starts off by closing its doors and chasing everybody out, to resume public parts later.

Jul 16 13:10 - Call over the PA system: “Renewed-detention negotiations, Prosecutor v Assange. Parties and representatives are called to room 37”. Room 27 opens; we of the public pour in.

Jul 16 13:04 - It’s almost five past the hour, and the room has still not opened. Rumors in the audience here say that the press conference with the Police afterward won’t be open to the public and is by pre-announced presence only.

Jul 16 13:03 - Some people have asked me why I haven’t taken a clear stance on this issue. The explanation is simple: since I have first-hand observations of the events surrounding the allegations, if this should ever come to trial, I would be a defense witness (and I have left a deposition with the Police to that effect). Therefore, I have refrained from speculating on the case in the media, given that such speculation could burn my testimony, and I consider that to be more valuable than a random voice with opinions. When people have asked me about my opinions anyway, I have pointed to the fact that I’m slated to be a defense witness and asked them if they can draw any conclusions from that, refusing to elaborate further.

Jul 16 13:00 - The room (27) has not opened yet. Maybe 30 people of the public are gathered outside. I recognize many or most of them.

Jul 16 12:58 - Test

Jul 16 12:57 - Only people with media accreditation are being let into the room where the actual court proceedings are held (room 37 in the Stockholm District Court) – the public is only welcome to an audio feed of the proceedings, which is fed to a room on a different floor (room 27). This mirrors the mock trial of The Pirate Bay, which was done the same way, in this very court, actually.

May 26 06:53 - Closing: the European Pirate Parties grew significantly, having seven parties with a strong showing rather than just the one Swedish party five years ago. Still, we went from two seats to one. New summary written in an article edit (liveblog ends).

May 26 02:11 - Unconfirmed reports say that the German Piratenpartei was 0.08% (zero point zero eight per cent) short of the bar for a second seat.

May 26 02:10 - Pirates in Czech Republic finished at 4.78% with 5.0% needed to pass the bar for seat allocation, so the Czech Pirate Party fell just short of one seat.

May 26 01:01 - As the vote count stabilizes, it appears final that the German Piratenpartei has won one seat and one seat only. The Czech Republic is still open.

May 25 23:04 - First Swedish election results project the Swedish Piratpartiet at 2.2%, slightly below the exit polls. This confirms that the Swedish Pirate Party has lost both seats in the European Parliament.

May 25 21:01 - Exit polls published in Sweden. The Pirate Party is projected to get 2.5% of the votes. That is not enough for a single seat, and it’s very unlikely that this can be caught up as the votes are counted.

May 25 20:56 - According to Sampo Smolander in the comment field, Finland is not taking any seats with 0.5% of the votes.

May 25 20:53 - The lowest score in Germany that gave a seat was 0.7%. The German Piratenpartei is projected at 1.4%, suggesting that they are very very close to a second seat.

May 25 20:52 - Swedish exit polls are expected at 2100, in seven minutes. That’s the first gate we need to pass. If the exit polls are in the 1-2% range, achieving 4% is tough; if it’s 3-5%, the rest of the night is a nailbiter.

May 25 19:14 - It’s going to be a while until results come in. Expect meaningful news at about 2200.

May 25 18:36 - Exit polls in Germany predict between 1.3 and 1.5 percent for the Piratenpartei, securing one seat and closing in on a second. We’ll also need to pay close attention to Sweden, Czech Republic, Slovenia, and Finland as the night progresses.

Mar 21 07:50 - MtGox has found 200,000 bitcoin which apparently were just laying around in a random drawer, following the scam blueprint to the letter, although on a slightly more drawn-out schedule.

Mar 03 20:45 - An article at CryptoCoinsNews, dealing with the past of Mark Karpeles, describes a previous business arrangement of Karpeles’ where he basically took the money and ran, bankrupting his business partner and not doing any of the contracted work. This fits very well with the overall image of a string of complete and untroubled deceptions and lies.

Mar 02 03:20 - Added more detail to the February 2014 timeline, with links to the now-gone press releases, courtesy of Internet Archive.

Mar 01 14:29 - Don’t miss the comments in the discussion thread over this article at /r/bitcoin on Reddit. Otherwise, mostly silence today on the matter. First relatively quiet day on the subject of Empty Gox in what feels like a month.

Mar 01 02:11 - Added the CoinLab lawsuits and the 2011 proof-of-solvency to the timeline. They are both relevant in context.

Feb 28 18:22 - According to the bankruptcy filings, the situation is even worse than previously imagined: 64 million US dollars and 850,000 bitcoin are missing.

Feb 28 14:47 - Unconfirmed just now (via Joanne Heidi): It seems Karpeles is seeking a reconstruction of Empty Gox though bankruptcy proceedings and to pay back account holders partially with a reconstructed company. If true, it continues the blueprint copycat scam.

Feb 28 13:08 - It’s possible to watch Mark Karpeles in the Japanese press conference declaring the bankruptcy. His body language is interesting to observe.

Feb 28 11:27 - A class action lawsuit has been filed that sues Mark Karpeles, MtGox Inc (US), MtGox KK (JP), and Tibanne KK (JP) for pretty much all of the above.

Feb 28 11:20 - Live updates, additions, and/or corrections will be posted here as the story keeps unfolding. All timestamps are European.

Feb 27 07:21 - You can feel the noose tighten around Karpeles’ neck as the picture becomes clearer, both in a figurative and literal sense. The horror stories of ordinary people losing all their savings, the money they were going to pay off their house or student loan, are beginning to surface. At the same time, the degree of mismanagement is becoming clearer – it appears that Karpeles was hiding a billion-dollar hole in the assets by cooking the books for three years. If that’s the case, this is no longer the “MtGox implosion” but the “Karpeles Scam”, second only to the Madoff scam as far as private schemes go (not counting LIBOR, etc). Jail would be one of few places Karpeles would be adequately protected from former clients, and there will be an interesting legal case as authorities will probably want to have a go at his personal assets.

Feb 27 06:41 - New information from Two Bit Idiot who first leaked the crisis response document detailing the loss of 744,408 bitcoin: There were never any interested buyers, there was a desperate CEO of Empty Gox who tried to get bought out. Once the courted propspective buyers saw the extent of mismanagement or fraud, they alerted the authorities instead. All of them.

Feb 26 22:44 - The site GoxBalance has been set up to gather information from individual people on just how much is stuck in Gox. As of this time, 807 people have submitted their claims on Empty Gox, adding up to 26.2 million US dollars and 108,522 bitcoin.

Feb 26 22:09 - Jesse Powell, a self-declared MtGox insider, makes a very interesting qualified guess that the loss of coins happened much, much earlier and at a much higher amount – possibly over 800k coins, and in June 2011, almost three years ago – and that Gox has been operating a fractional reserve since, working to fill the hole. Powell guesses that it seemed to work until fiat withdrawal problems caused people to start withdrawing bitcoin instead, depleting the thin reserve. Hence the absence of books and balance sheets, posits Powell: they wouldn’t have added up, so Gox management preferred to go without them entirely rather than declare the gaping hole where its assets should have been.

Feb 26 12:23 - Another update to the Gox home page. This one says “We’re working very hard […] to find a solution to our recent issues. Stop asking us questions”. Yes, they really are calling the loss of a billion dollars “recent issues”. Also, the “stop asking us questions” statement at this time has to go down as a superb case study of a glass crater in future Public Relations textbooks.

Feb 26 11:27 - On Reddit, user ‘thesacred’ notes about the first interview with Mark Karpeles (CEO Gox) after the shutdown, that “in the first public communication after shutting down site containing millions of dollars belonging to thousands of people, who have been kept completely in the dark with no information about the status of their money, Karpeles posts a picture of his cat, links to a batman meme, and complains about getting fat.” He then adds, “This fucking guy”.

Feb 26 08:10 - The bitcoin exchange rate passes $600 per coin, already having regained 50% from the bottoming out at $400 yesterday on these news. You have to give it to bitcoin; its ability to survive and overcome crises that would have killed anything else is remarkable.

Feb 26 07:26 - Roger Ver, who has seen the Gox books, has made a video statement where he states that the cause was “…a total lack of book keeping on the part of Mtgox”. If the Gox management did indeed fail to list the one-billion-dollars-worth of vault bitcoin assets in their books and balance sheets, then that’s criminal mismanagement in most jurisdictions.

Feb 26 00:13 - Andreas Antonopoulos (one of the key bitcoin developers) points out, in a rather technical post, that it is impossible for funds to “leak” from cold storage. The very definition of cold storage means it doesn’t leak. Either there was no leak, or there was no cold storage.

Feb 25 23:53 - Mark Karpeles, CEO of Empty Gox, has confirmed the authenticity of the leaked document, though he points out that it’s a draft with suggested options.

Feb 25 23:39 - This story has reached beyond tech and financial media; it’s being covered in mainstream oldmedia up to and including the evening TV news.

Feb 25 18:06 - Mark Karpeles has recently bought the domain gox.com, according to the people who brokered it, which lends further credibility to the leaked crisis recommendations document which suggested just that – a rebranding to “Gox”.

Feb 25 17:20 - The exchange rate seems to already recover from the loss of Empty Gox from the ecosystem; the exchange rate at Bitstamp is already back at $550, having bottomed out at $400. However, as with anything bitcoin, this is too early to call.

Feb 25 17:14 - Empty Gox has added a nonsense statement on their previously-empty web page: “In the event of recent news reports and the potential repercussions on MtGox’s operations and the market, a decision was taken to close all transactions for the time being in order to protect the site and our users. We will be closely monitoring the situation and will react accordingly.”

Feb 25 16:42 - The claim of a years-long-running hack against the vault comes from the leaked strategy document: “At this point 744,408 BTC are missing due to malleability-related theft which went unnoticed for several years”, in bold. At this point, there is nothing that contradicts its being genuine; to the contrary, the timetable of the report agrees with events unfolding today.

Sep 29 18:00 - Yiiee-hah! Meteor server is operational on VM Smallwebs. In addition, this meteor.js seems better-behaved than the old one…

Sep 29 17:55 - Testing after having configged Meteor better (hopefully)…

Sep 29 17:38 - Testing, foobar

Sep 29 17:36 - Testing II – why is Meteor not updating?

Sep 29 17:34 - Testing aplenty – is the new Meteor up?

Jun 21 12:34 - (End of liveblogging session. This page will not update further.)

Jun 21 12:33 - I will publish a longer article about today’s events in about an hour.

Jun 21 12:31 - Last question from the press – press conference is ending.

Jun 21 12:28 - The press conference room is full, with people standing in the back again. The press is starting to ask (relevant!) questions – the room is acting as if ACTA is a done deal now, disregarding the fact that the European Parliament still has its plenary vote to go. The discussion feels like a post-mortem of just exactly where the crazy train was driven off the nearest cliff.

Jun 21 12:19 - EPP representative plays down rumors of EPP gunning for a secret vote in INTA. “That’s not how it should be done.”

Jun 21 12:10 - EPP: It appears that the Polish EPP delegates voted against ACTA, breaking party lines.

Jun 21 12:09 - Andersdotter concludes with a healthy dose of reminder that today’s copyright/patent regime is an active impediment to the next generation of entrepreneurs and industries in Europe. More people need to hear that.

Jun 21 12:07 - Amelia Andersdotter is applauded from the audience, as the first speaker getting that treatment.

Jun 21 12:06 - “This was the first time that the citizens of Europe won against combined forces of big industry and the Commission. Epic, really.”

Jun 21 12:06 - Amelia Andersdotter (Greens/EFA, Pirate Party). She talks about access to medicine, and weaves in the three pillars of the Swedish Pirate Party. She moves on to bash the Commission’s lack of respect of Parliament in the most eloquent and unmistakable ways.

Jun 21 12:04 - “Thanks to participatory democracy, and citizens who voiced their concerns about this agreement, we canow go in a different direction.”

Jun 21 12:02 - EPP: “We are going to lose a lot of time and put people at risk of counterfeit products where they’re working if we ultimately reject ACTA…” How does that work with ACTA not changing any laws whatsoever?

Jun 21 12:00 - Now, a representative for the EPP group, explaining their desire for ACTA’s passage. “ACTA as it stands needs to be clarified and improved.” Yes, except that wasn’t possible. Smoke and mirrors.

Jun 21 11:59 - Still can’t move my left foot without searing pain.

Jun 21 11:59 - “Second lesson: Parliament needs to be better at engaging with citizens.”

Jun 21 11:57 - “First lesson: This vote proves that the European Parliament is definitely perceptive; it is definitely hearing the voice of citizens.”

Jun 21 11:55 - Rapporteur David Martin is sitting next to Amelia Andersdotter (Pirate Party MEP) on stage, talking about the benefits of “intellectual property”. Something tells me the entire stage doesn’t agree with that. Martin ends with a brilliant conclusion, though; “In the end, [we decided that] civil liberties should win over intellectual property.”

Jun 21 11:53 - “I think it is quite telling that nobody put forward an alternative to adopt ACTA. The only alternative was to reject or postpone. What this shows is that ACTA was a political decision, and not a legal one.”

Jun 21 11:52 - The rapporteur, David Martin, opens and thanks everybody involved in the process so far. “I welcome particularly the active involvement of citizens, who have been highly involved in this dossier.”

Jun 21 11:50 - Press conference starts. “The committee decided today to recommend the rejection of ACTA, with 19 votes in favor [of rejection] and 12 votes against.”

Jun 21 11:49 - If I were still in the military, I’d know exactly how to bandage my foot right now. But I don’t have any bandages… (It’s not broken, is it? Hurts terribly.)

Jun 21 11:48 - Now in press conference room, where the rapporteur on ACTA (David Martin) will be giving comments on the INTA committee approving his opinion. On the way there, I sprained my left foot and ankle badly – I hope I’ll be able to get through the day despite the pain :/

Jun 21 11:37 - “Could I ask the journalists to leave the room…” the room is in disarray. Moving to press conference room.

Jun 21 11:35 - The recommendation to reject ACTA PASSES, in a 19-against-12 vote! WE WON! WE WON!

Jun 21 11:34 - The final vote remains, and there appears to be some major confusion as to the results of the vote on the amendment that just happened.

Jun 21 11:33 - WE WON IN INTA!

Jun 21 11:33 - Amendment three is re-voted, and it is rejected 19 to 12. WE WON!

Jun 21 11:32 - It is now clear that INTA will recommend a REJECTION of ACTA with a safe margin!

Jun 21 11:31 - AMENDMENT THREE FAILS, 13 VOTES FOR AND 19 AGAINST! This, however, is 32 votes, one too many.

Jun 21 11:30 - “If amendment three is adopted, the final vote on ACTA is suspended until the European Court of Justice has given its verdict. If it is rejected, we go to a final vote.”

Jun 21 11:30 - Amendment procedures have started. Amendment one (yes to ACTA) was just WITHDRAWN. As was number two. There’s only one amendment – postpone ACTA.

Jun 21 11:29 - ACTA COMING NOW.

Jun 21 11:29 - People are not just standing along the back of the room now, but also along the sides of it. I count four TV cameras from where I’m sitting (Jerezim counted six, but I can’t see the entire room), in addition to the eleven (!) TV cameras built into the room itself.

Jun 21 11:25 - “Establishment of instrument for stability”, six amendments. Still not ACTA.

Jun 21 11:19 - Still not ACTA, but voting is proceeding at a breakneck pace on a large number of other items. ACTA is last in today’s session.

Jun 21 11:14 - “Establishing rules and procedures for the European Union’s instruments for something something external actions”. Voting on amendments. In other words, still not ACTA.

Jun 21 11:13 - Ok, so the live page is updating. All set for today’s main attraction: ACTA coming up any minute now.

Jun 21 11:12 - Test – do I have enough bandwidth, here?

Jun 21 11:11 - Still not voting on ACTA.

Jun 21 11:03 - Bandwidth is becoming scarce in the room, indicating that we’re approaching today’s main attraction.

Jun 21 11:02 - Another item. Still not ACTA. 58 amendments.

Jun 21 10:57 - 31 votes in a vote right now. A lot of stirring in the room. It appears another MEP with voting rights has joined the session, upsetting the vote balance AGAIN!

Jun 21 10:57 - “We are approaching the end of the session…” INTA votes on an item with 57 amendments right now, didn’t catch which one, but obviously not ACTA as it has three or two amendments – two if MEP Fjellner (EPP) has retracted his amendment to recommend acceptance of ACTA, as he told media.

Jun 21 10:53 - INTA session continuing. Still not ACTA. When ACTA arrives, there will be voting on amendments first, and then on the final, possibly amended, report. All amendments must fall for INTA to recommend a rejection of ACTA.

Jun 21 10:48 - By “another vote just appeared”, I should clarify: it was not a random extra vote, as before, but another Member of European Parliament with voting rights actually entering session.

Jun 21 10:47 - Another vote just appeared in INTA, changing the ACTA vote balance! It’s one of the non-inscrits, one of the groupless Members of European Parliament. I did not catch his name. This vote is now completely up in the air.

Jun 21 10:46 - “One person too many was voting, there. It’s like a crime story – whose vote is extra?” Recurring theme.

Jun 21 10:44 - I’ve been told that the EPP group tried to disqualify one vote count from the S&P group. One ordinary member was prevented from voting, and when this happens, reserves from the party group take their place – this is standard procedure. However, the EPP argued that the reserve would not be allowed to vote in stead of the ordinary member, and that S&P would have one vote less. This parliament can really be kindergarten level sometimes – such disrespect for democracy would never happen in places like a high school student council.

Jun 21 10:41 - Media is everywhere in this INTA session, and people are standing in the back. Yes, the session room has run out of seats – this kind of bureaucracy practically never draws attention otherwise.

Jun 21 10:39 - According to @EuroparlPress, the ACTA vote will come around 11:00, around 20 minutes from now. However, this is far from certain and determined – it will come whenever the previous items are finished.

Jun 21 10:36 - The list of amendments on the still-upcoming ACTA vote is here, in LQDN’s summary. We see that amendments one and two, if adopted, change INTA’s recommendation to a “yes”, and amendment three calls for a postponement of the ACTA decision until the European Court of Justice has decided on the treaty’s legality. Thus, no amendments on ACTA must pass; the rapporteur’s draft opinion must be passed as written.

Jun 21 10:31 - According to Jeremie Zimmermann with la Quadrature du Net, all the MEPs from party groups opposing ACTA are present in session.

Jun 21 10:26 - Yet ANOTHER vote interrupted because the EPP group had one vote too many. I did not track on which session item, but there’s a clear pattern here. That was the third time today.

Jun 21 10:25 - Still not voting on ACTA. Some big-business industry group had gotten to the session entrance and put up big posters about how industry organizations comprising 120 million European jobs (this number climbs fast!) support ACTA passing.

Jun 21 10:23 - The pace of voting is ridiculously fast. “Amendment two, those in favor, those against, abstentions, carried. Amendment three, those in favor, those against, abstentions, carried.”

Jun 21 10:18 - The number of people voting are varying quite a bit. Another proposal (still not ACTA) just passed by 29 votes to none. I’ve been told that it’s supposed to be 14 INTA delegates in favor of ACTA and 14 against in session.

Jun 21 10:16 - Ok, I was confused by the rapid pace of the voting here. We are not voting on ACTA yet; it is the final item of the day.

Jun 21 10:14 - The final vote on a random item (not ACTA) was re-made AGAIN, with one too many EPP votes, and then passed 25 against 2.

Jun 21 10:12 - An amendment to a random report (not ACTA) passed with a 16-13 vote, but was redone. The chair is now pointing out that there are too many EPP members voting. After a re-vote, the amendment passed 17-10.

Jun 21 10:10 - Voting has started. The chair warns of a long list of items today. ACTA is last.

Jun 21 10:08 - The session starts. The chairman addresses some media formalities for the session, and reminds the press that there will be a press conference 15 minutes after the vote [on ACTA, presumably]

Jun 21 10:07 - The live video broadcast from this session is right here. Unfortunately, it appears to be Windows-Media only, so it doesn’t work on Android.

Jun 21 10:04 - There is a live broadcast of this meeting for those who prefer following video. I am trying to find it; Google-fu with “INTA committee video european parliament” should be a starting point. Despite being past 10:00, the meeting has not yet started.

Jun 21 10:01 - Jeremie Zimmermann from La Quadrature du Net is also here in the room.

Jun 21 09:59 - The voting margins are harrowingly narrow, and nobody knows which way INTA will lean. One thing is clear – INTA does not care at all about the recommendations of the previous committees (ITRE, DEVE, JURI, and LIBE); this issue is far too high-profiled to vote on somebody else’s recommendation. But that sword swings two ways: that also means that INTA’s recommendation today will be next to meaningless, being little more than a half-time indication of what the plenary majority looks like, rather an actual recommendation with weight. Still, it draws enormous interest.

Jun 21 09:56 - What we can expect from today is that the conservative and big-business party groups (ECR and EPP) will attempt to recommend a postponement of the final vote on ACTA until after the European Court of Justice has given its final opinion, thus delaying the final vote by about two years. Nobody knows if an INTA recommendation of postponement means an automatic postponement by the European Parliament as a whole: as usual, the ones deciding that are the ones interpreting the rules, and the ones interpreting the rules are the ones who are politically strongest for the time being.

Jun 21 09:53 - On location in the INTA room, JAN-4Q1. I can’t recall having seen a room this full 15 minutes ahead of the session start time before.

Apr 22 19:22 - Testing on reinstall of Peregrine with separate SATA controller.

Apr 16 15:32 - Ok, live updates (refreshless) seem to work again. It was really a very simple error.

Apr 16 15:30 - (Yes, I’m still testing.)

Apr 16 15:30 - Except perhaps Game of Thrones.

Apr 16 15:29 - Indeed it was. And that concludes the postmortem of this session. Nothing more to see here.

Apr 16 15:28 - Testing again. Looks like it was a simple case of PEBKAC.

Apr 16 15:27 - Testing April 16.

Apr 16 15:09 - Ok, liveblogging appears broken. Sorry about that (it does not auto-refresh). I will have to troubleshoot that later.

Apr 16 15:02 - Testing CloudFlare interference.

Apr 16 15:01 - Testing meteor.

Apr 16 14:52 - Ping meteor server.

Apr 16 14:52 - My server died right after the last note. I still have no idea why – a cold reboot (power cycling) was needed to bring it back online, the hardwire reset button was not enough. Sorry about that.

Apr 14 16:04 - Doctorow: “If all the Napster users in the US had voted for a particular president, that person would have been president.”

Apr 14 16:02 - Now: Cory Doctorow!

Apr 14 16:01 - I’m not sure if the live updates work on all browsers.

Apr 14 15:57 - Meeting with many of the people who were at the first 2007 meeting in Vienna. It’s kind of funny how we share this feeling of being veterans, and explaining how things were “back then” – meaning five years ago – to new pirates.

Apr 14 15:43 - Pulled back from the crowd for a few minutes just to breathe, hanging out in the openspace area where people are discussing various projects. Doctorow on soon.

Apr 14 15:35 - Met Fabio Reinhardt, one of the people elected into the Berlin Parliament. He’s giving a keynote tomorrow, shortly before I give the closing keynote. Another guy I’m looking forward to hearing. The purposely chaotic arrangement of this conference really shows its strengths, letting each and every participant get the most from it.

Apr 14 15:28 - The social parts of the PPI general assembly is starting to show its merits. Everybody is hanging out and getting to know one another, rather than necessarily listening to everything going on in the main session. People getting to know one another across country borders is what causes the organization to learn across those same country borders.

Apr 14 14:41 - Cory Doctorow has arrived, hanging out at the bar with a really large coffee. Apparently, he just flew in from the States.

Apr 14 14:40 - Several new pirate parties are being voted in as new members of the Pirate Parties International. Applause follows after every vote.

Apr 14 14:29 - Back after lunch. I could hardly get through the door before being grabbed by reporters and have done three more interviews. This liveblog is getting a very boring message, me doing what I do. One observation, though, is that the (MANY!) reporters here have definitely done their homework. They know about minute details of the movement and ask about plans, about trends, about leadership. Cory Doctorow is coming up for a keynote shortly – I’m really looking forward to that.

Apr 14 13:06 - Lunch break. My entire morning was spent before TV cameras, so I missed much of the in-session action, but on the other hand, I did things as well as I could in order to spread the ideas, the messages, and the message about the parties’ impact. Sessions resume… when people get back from lunch.

Apr 14 11:38 - Another five interviews later, I need some air. Currently outside, chatting to a couple of Slovenian reps that I last met in Ljubljana.

Apr 14 11:07 - Three TV interviews later. Interest remains high.

Apr 14 10:43 - The room is full and out of seats, as I can tell. People are standing in the back – I can’t tell if media or participants. We are still in the meeting opening formalities. One of the organizers just asked me to go to the press room, so small pause in liveblogging.

Apr 14 10:36 - What strikes me at the 2012 PPI meeting is how many new countries are here, and how successful they are already. Greece founded three months ago, and are already polling at 1%. Moldavia is here, as is Romania. I’ve met with reps from pretty much every country in Europe already. Oh, Portugal was another nice surprise.

Apr 14 10:34 - The meeting as such has just started. media is EVERYWHERE. Gefion_UK tweeted succinctly, “wherever there is @Falkvinge, there is Camera”. The PPCZ has arranged this beautifully, especially given the unexpetedly large interest at the last minute.

Mar 26 21:35 - Final test before disabling post

Mar 26 17:32 - ooh aah, a little bit more

Mar 26 17:31 - Testing a little bit more

Mar 26 17:27 - Demoing more

Mar 26 17:12 - Foobar

Mar 26 16:52 - Demoing more

Mar 26 16:48 - Update, showing off as demo

Mar 26 16:39 - Testing la la la

Mar 26 16:30 - And more – foo

Mar 26 16:23 - Testing again

Mar 26 16:20 - Testing after installing Meteor

Mar 26 10:07 - Final test

Mar 26 09:44 - Testing again

Mar 26 09:43 - Testing. Start.

DISCLOSURE
As stated before, I lost 160 coins in this event, but I managed to get a majority of my holdings out in time. My heart and thoughts are with those in our community who lost everything, regardless of amount.
You've read the whole article. Why not subscribe to the RSS flow using your favorite reader, or even have articles delivered by mail?

About The Author: Rick Falkvinge

Rick is the founder of the first Pirate Party and is a political evangelist, traveling around Europe and the world to talk and write about ideas of a sensible information policy. He has a tech entrepreneur background and loves whisky.

Liked This?

By participating in the discussion and posting here, you are placing your contribution in the public domain (CC0). If you are quoting somebody else, credit them.

Contributors take own responsibility for their comments.

141

  1. 2
    chrono

    im also looking for gox to payout % of the bitcoin debt. would be interesting situation.

  2. 3
    occams razor

    man, he just lost the keys to the cold storage.. it’s probably as basic as that

    • 3.1

      When you see the timeline like this, with deception from beginning to end, do you really believe that?

      • 3.1.1
        kij

        Mark Karpeles, is a nerd with all the stupidity & gullibility it means. But it’s hard to believe that he is malicious at this point during all these years.

        Maybe i don’t want to accept that I have lost money because of an unbelievable fraud. Maybe I’m still under the shock of this announcement. But still, there is some shadow points on this case :

        – Does Mark K. acts under the constraint of the US government? Or is this just some conspiracy theories ?
        – What about the wallets that seem to still belong to MtGox and are still plenty of bitcoins? Is it a fud ?

        I don’t want to defend Mark Karpeles, but to help people understand this case, and let them think by themselves you should have included in the timeline the fact that Mark Karpeles has proven in 2011 that he has the people bitcoins by transferring it wallet to wallet. http://letstalkbitcoin.com/the-ghost-in-the-machine-at-mtgox/

        Please, do not stamp out the facts that do not go in the direction of your version.

        Regards

        • mokoloko

          Karpeles is a self-though fluent Japanese speaker with a lifetime of core development experience. Mark is a probably a rare genius. His happy-smiley-dolphin-face makes us feel sorry for him. But I think no funds are stolen/lost. Since, according to the Mandala report, Karpeles was the only one with access to cold storage – he stole the wallets (so no coins were moved, just the wallets).

          20 years from Karpeles will be sor rich he can buy a country like the USA or China and turn it into his personal “Magix The Gathering live cosplay themepark”.

          He is the ultimate James Bond villain – he wins.

  3. 4
    Shaohua Li

    The value of lost coins seems wrong… 750,000 x $580 = 0.435 billion. The author mistakes it with 5 order of magnitude.

    • 4.1

      There are two valuations: “at peak value” and “replacement value”.

      The peak value would be 744,408 x $1240 = $923,065,920. This is the “just under one billion US dollars”. However, this is a false mirage. It was never possible to sell or buy 744,408 bitcoin at this price, or at any single price. It is much too large an amount.

      To get an accurate market value, we’d need to look at the replacement value of those 744,408 bitcoin, if purchased on the open market today, would be well over one billion US dollars. The exchange rate listed isn’t a published exchange rate from some change office; it’s the rate of the latest transaction. Right now, on Bitstamp, you can buy as much as 131 coins for up to $570 per coin. If you want to buy more than that, you must pay more. If you want to buy 3,000 coins, you need to pay over $600 for the last ones. The cost to replace 744,408 coins would be well in excess of one billion on the open market.

      Chers,
      Rick

      • 4.1.1
        Incredulous

        Any current exchange price for BTC is not representative of Market Value, there is very limited liquidity in the market which is symptomatic of the hoarding. If anyone tried to realise their gains in significant numbers it would very quickly fall in value.

        The only way Bitcoin survives is if it becomes an efficient method of exchange, it simply makes no sense as a store of value until it is widely accepted. Which means it needs to be able to inflate. (Fractional reserve banking or otherwise)

        From a rational perspective it would only make sense to hold Bitcoin once it has real world purchasing power. Its current deflation is actually prohibiting it from becoming a widely adopted method of exchange.

        In reality, the most people have lost is the aggregate amount of FIAT currency they put into MtGox in the first place. Not the unrealised gains as a result of trading BTC.

      • 4.1.2
        StarTrekCoin

        I’m glad you mentioned this. If the coins had to be replaced fairly quickly the price would be many billions because ask prices would be increased suddenly.

      • 4.1.3
        Richard

        You’re saying that the estimates of the peak value are misleading because you could never sell that many bitcoins at that price in a short time, possibly even at all. This much is true and a basic fact of any free market. Then right after that you claim an even higher value on the assumption that someone wants to buy back 750k bitcoins in a day? You can’t have it both ways. People only lost what they put in, and it didn’t disappear completely – it went to someone else. The net value of all bitcoin trading is $0.

        • StarTrekCoin

          @Richard. The FBI will sell its SR BTC load at close to the market exchange price. Watch and see. Try and replace 750k BTC quickly and watch the price skyrocket.

        • Anderx

          +1 This is true of all trading. All money is measuring the magnitudes of perceived value and facilitating the transfer.

  4. 5

    Looks like his cat has moved into a posh Tokyo hotel, the Cerulean Towers :)

  5. […] The Gox Crater: Crowd Detectives Reveal Billion-Dollar Heist As Inside Job – Falkvinge on Info… […]

  6. 6
    ItsMeAgain

    This is the kind of analysis I like.

    I’m still in between “I can’t believe we got goxed” and “who knows, in bitcoin world everything is possible”

    Looking forward to systems that won’t allow people to pull a mybitcoin.com ever again.

    Wink wink

  7. 7
    LolGox

    Stealing bitcoins is not a crime.

    • 7.1

      What’s the weather like on your planet?

    • 7.2
      Zirgs

      It might be possible to sue gox and get at least some of the real money out.
      However no court will take bitcoin seriously as real money (and bitcoin theft as a real crime) – to them they are like video game money.
      You don’t call real life cops when somebody steals your car @ GTA online.
      So it’s very unlikely that you’ll get your bitcoins back.

      Don’t want government regulation (and changes to the protocol to make it possible) – then you’re on your own when shit hits the fan – government will not help you.

      • 7.2.1
        LOLBTCLosers

        Love the analogy! It’s all funny money. Good luck getting anyone to give a rats ass.

        Like Zirgs said, if you don’t want government regulation, then you can’t expect any help when it all goes tits up.

        How do you even prove your losses anyway?

        If you lost your life savings, shame on you for being dumb shit.! Sorry.. that’s not fair. You’re not necessarily dumb. Just GREEDY. Probably both dumb and greedy.

        Toodles!

      • 7.2.2
        Caleb Lanik

        Even if you consider bitcoins to be nothing more than a commodity, they are a commodity worth a considerable amount of money, and stealing half a billion dollars worth of anything is a crime. Yes, I agree that these exchanges should have much more government regulation, but what Gox did, even by there own version of events, is at minimum criminal negligence.

    • 7.3

      “Stealing” itself is a crime action. No matter if is stealing of bitcoins or sanitary napkins !

  8. 8
    Mr. Pond

    The entire situation around Mt Gox reeks of fraud. That being said… Crowd detectives? Really? That is a very dangerous thing: look what happened when reddit users tried to determine the identity of the Boston bombers. A tragic outcome. Investigation of this sort of fraud is best left to actual detectives not amateurs, no matter how well intentioned.

    • 8.1
      DrFiZ

      Sorry but imho this is pointless.
      Every police investigation can be wrong, with innocents jail or guilty still in freedom. It happens regularly everywhere.
      So, what does it mean? According to your point of view that we cannot fully trust police investigations as well as we cannot trust the crowd investigations.
      Investigation IS dangerous on itself.

      • 8.1.1
        AYteeff

        True, but at least the police have to adhere to a code of conduct and laws during their investigations. Sure some can be dirty cops and fabricate but in the majority of the time they act according to the laws they are bound by…. on the other hand anon, and “crowd detectives” only need to be guided by their conscience and their ego so as to be the first to name a suspect…. a very dangerous proposition.

        Laws ensure (or at least intend to) that we are all treated equal, both during investigation and trial. Granting everyone those same rights (outright obvious criminals and those unknowingly and wrongly accused) allows the truth to be discovered and freedom or guilt to be determined.

  9. 9

    There’s some serious trillion/billion yoyoing going on here

  10. […] There are still many question marks remaining surrounding the missing 744,408 bitcoin at Empty Gox, valued at their peak to just under one billion US dollars, and which are well north of that in replacement value on the open market today. What’s becoming clear, though, is that this wasn’t a theft that properly shut down operations as soon as it was discovered. Instead, Empty Gox and its CEO Mark Karpeles appear to have attempted to benefit and profit from it. That would cross the line into criminal complicity, even if they were not part of the original loss – something that also remains an open question… CONTINUE […]

  11. 10
    Peter

    Admittedly I don’t understand any of the technical stuff, but from a philosophical point I gotta wonder if a currency not backed by a goverment can really be stolen? Seems to me more like if collective supplies in a autonomist survivalist bunker has been “relocated” by one of its founders…

    • 10.1

      Can a car be stolen? Can a car be traded?

      Bitcoin is something that can be traded. The reason it is used as a currency is because it’s so fluid, like gold.

      • 10.1.1
        Parakletos

        Or a share of stock, for that matter. Or your shares at your credit union — which are only PEGGED to the dollar.

        I don’t think there’s any question that a theft occurred. And likewise, if they can be kept ‘secreted away’ until the Statute of Limitations runs out, then Karpeles can spend them freely without any fear of legal repercussion.

  12. 11
    @BitcoinRat

    some more info to add to the ‘timeline”

    Karpeles registered himself as owner of the Domain Gox.com in the evening of 24th February 2014.

    https://twitter.com/BitcoinRat/status/438431999049494528/photo/1

    before that The Domain was briefly owned by Booth.com ( a domain name reseller )

    I’ve been doing a bit of research into the history of the Domain and it doesnt seem to have been anything to do with karpeles before that date.

    I have screenshots from “wayback machine” website archive that shows it started around 1996 as a web marketing site, around 2010 it was briefly a photoshop tutorial site, then a photography site until late 2013 when booth.com domain sellers acquired it.

    hope that adds to the picture of what karpeles is up to

  13. 12
    Jorge Stolfi

    Imagine that an exchange operator X was contacted in private by some person B who wants to buy large lot of BTC from their corporate wallet at 15$/BTC, when the market price is 10$/BTC.

    The buyer B could be a rich bitcoin believer, someone starting a bitcoin inevestment fund, or some criminal who needed a lot of BTC for some illegal activity. Such a private deal would make sense for B, since buying that many BTC would take time, may cost more than 15$ each, and coudl call unwanted attention on B.

    X may see no ethical reason to reject the offer , since he would not be doing “fractional banking” but merely storing the clients’ assets in a different form — just as he could have stored their USD in treasury bonds instead of the corporate checking account. He could still honor all BTC widthrawals, by buying back those coins — while still making 5$ for himself on each of his client’s coins.

    But now imagine that the BTC price shoots from 10$ to 100$, before X has time to buy back the coins. He would effectively have lost 90% of his clients’ coins.

    When X’s insolvency becomes public, B will surely press hard on X to keep the deal secret; otherwise X’s clients might go to court against B, to have the deal voided and their coins back.

    Perhaps B will even try to “help” the detective crowd by leaking documents and other evidence that points away from the deal.

    Just a plot for a fiction tale, of course.

    Seriously, one should not trust ANYONE from the “core bitcoin community”, nor any “evidence” that they may produce. A month ago they were all Mark’s friends, admirers, defenders… 8-(

    • 12.1
      em

      “Seriously, one should not trust ANYONE from the “core bitcoin community”, nor any “evidence” that they may produce. A month ago they were all Mark’s friends, admirers, defenders… 8-(”

      Absolutely! I would also include anyone who stands to gain from ‘bitcoin’ in one way or another, like one of twobitidiot’s inside informant is a precious metals dealer who most likely helped karpeles move his stolen btc to gold, palladium, etc. Everyone is happy.

      • 12.1.1
        Parakletos

        There was a wallet that people are passing around as the wallet of the stolen coins. I followed the transactions for a bit, and it kept dividing into two roughly-half-sized wallets. And then those wallets broke into two, etc., etc., etc.

        If that is the correct wallet, then that tells me that the culprit is most likely breaking the coins up into small relatively fixed-sized wallets for easy person-to-person sales. Probably on MicroSD or such. That way they can be sold without piecing them off the main wallet at each sale.

    • 12.2
      Hobart

      Yeah, cos if X is running the largest (and only) exchange he’s probably not smart enough to think about the massive exposure he’d be taking, or moreover that there’s no where else for him to buy that many bitcoins.

      Keep trying Sherlock, you’ll find that money if you keep guessing.

      • 12.2.1
        Jorge Stolfi

        Like any banker, X would expect that his clients would never want to withdraw everything at once. In his mind, if perchance his coin reserve started to shrink , he would buy back just enough coins to replenish it. At worst, he could refund his clients in cash at the current market price, or even a small premium. Note that he did nor steal the coins with the sale, merely converted it to another form with the same value.

        It would have worked, if the price hadn’t risen 10,000% in less than a month. Note that the price was ~14 USD in Ju/2011 and ˜14 in Jan/2013, for example: no change for 18 months: …

        • Jon Hendry

          “Only when the tide goes out do you discover who’s been swimming naked.” – Warren Buffet

          Looks like Karpeles was swimming naked, and it was revealed by some combination of the price rise, the Chinese withdrawals, and other unusual occurrences.

          Much like Madoff was sunk when the economy and markets ran into trouble in 2008.

    • 12.3
      Richard

      To hold any amount of cash against a large bitcoin liability, knowing how fast the price changes, would take a super-human amount of stupidity. That amounts to shorting bitcoin. Why would someone who believes and invests in its future make a large bet like that?

  14. 13

    Bitcoin is a scam, is what I wrote here on Jan25th in the toy hungry post, and I’ve been saying Bitcoin is a pyramid scam since the beginning.

  15. 14
    Zacqary Adam Green

    one individual is sitting on 6% of the world’s future trade and retail currency supply. In today’s USD value, such an amount would be on the order of 20 trillion US dollars

    What would actually happen if that individual tried to use that money? That’s a wealth concentration we’ve never seen before in the entire world, and everyone would know about it. Bitcoin isn’t a useful commodity beyond its use as a currency, and that kind of a situation would probably shake people’s belief in the whole thing. It builds up over years and years to become the global trading currency, and then all of a sudden one guy comes out of the woodwork as a trillionaire? The global reaction would be, “Well, this is dumb.”

    • 14.1
      Incredulous

      Spontaneous human combustion en masse?

      I think it is just as likely we are all dealing with the post apocalyptic nuclear fallout, scratching our rapidly balding heads, wondering where all the Bitcoin went…. possibly in a self reflective, introverted way, as the EMP destroyed the interweb as we know it.

      It’s even possible the Secret Gazillionaire started the arms race in the first place as the rest of us cowered behind our ramshackle governments, singing “No Man is an Island” by Joan Baez to keep morale up.

    • 14.2
      Zirgs

      Satoshi has even more coins.
      That’s why I hope that bitcoin will not be a world currency.
      It will make Satoshi and Karpeles (and probably some other unknown people) too powerful.

    • 14.3
      Riddler

      If we take into account the multiplying factor used in fractional reserve used for US dollars (uased in the calculation), and apply that to Bitcoins, the amount of money could well be 4 to 8 times that mentioned here.

      • 14.3.1
        slacker

        Except that fractional reserve banking is not (yet) common in Bitcoin, and will likely never become to such a degree as with classical currencies. Since the blockchain is public, any fractional reserve scam is bound to be quickly discovered. Even if people accept fractional reserve as normal, the safe percentage of real coin stock needed to avoid a bank run will likely be much larger than with other currencies or commodities.

    • 14.4
      Zacqary Adam Green

      Best-case scenario: some business the size of, say, Amazon decides that they’re not going to accept any of this guy’s coins. Everyone in the world who does business with Amazon panics and adopts the same policy in their bitcoin clients to make sure that they don’t get stuck with a bad coin. Then everyone else who’s afraid that they might have to do business with all of those people do the same thing. In the end, the coins are effectively destroyed, the bitcoin supply contracts, and who knows what the resulting deflation would do.

      Worst-case scenario: Bitcoin is now subject to unpredictable inflation whenever this guy decides to start spending, because by making 700,000 bitcoin no longer dormant, it effectively increases the money supply. Our Mt. Gox thief now has the power to seriously screw with the global economy, nobody will know when, and the resulting uncertainty will cause a massive crisis.

      Actually, the real worst-case scenario is that people develop such a religious devotion to bitcoin that everyone actually DOES decide that this jackass has 20 trillion dollars, but that’s not gonna happen.

      • 14.4.1
        Bitdoge

        Much like all of the rest of the bitcoin thefts, we have no way to determine which coins were “this guy’s” and his coins that he stole from us will go back into the pool. The advantages of bitcoin become severe negatives when trying to root out bad actors.

    • 14.5
      Richard

      Even if Bitcoin became the only currency to be used in the world, which is highly unlikely for many reasons even if it is widely used, it’s ridiculous to directly relate that to the total amount of trade. All the world’s trade could be done with one penny if it moved fast enough (and Bitcoin is supposed to make transactions efficient). 6% of that penny would be approximately not very much. Thinking that this could be worth anywhere near $20T is 2 -3 (very large) steps removed from reality. You’re trying to say that the width of a river and the amount of water passing through it are the same thing. Taking a bucket of water out of the river doesn’t give you very much.

  16. 15
    Mango

    Why would gox.com get bought on the 24 of Feb ?
    Weird..

    • 16.1
      Zirgs

      That might actually happen and the new exchange will probably attract the same kind of fools that put their money into Silk Road 2 or Project: Black Flag (That shit was hilarious as hell :D).
      That just proves that bitcoiners have memory of a goldfish and that their enormous greed just turns off their brains.

      • 16.1.1
        gurrfield

        If you feel stressed, please take it easy on the posting. It can probably increase your health if you leave it just a week or so. I think you deserve a small 1w vacation.

  17. 17

    Thanks for covering this again, Empty Gox is clearly not giving the whole story, and the damage has been done. I’m so uncertain on how the rebirthed “GOX” will use it’s massive user base to attract customers, but part of me is hoping they are finally dead forever – unless they “miraculously”…”recover” the 49% like mybitcoin did.

  18. 18
    Parakletos

    I watched the following transpire about a mile away from my home at a shopping center.

    Hardware store went bankrupt. Held a fire-sale to liquidate. Left hand bought all the tools from the right hand at pennies on the dollar. And then opened up under a different name and tax ID number IN THE SAME MALL — right across from the husk they left behind.

  19. […] melden Mt. Gox-gebruikers voor het eerst dat ze ook geen bitcoins meer op kunnen nemen. Volgens Rick Falkvinge duidt dit erop dat Mt. Gox geen bitcoin-reserve meer heeft. Pas wanneer iemand bitcoins of geld […]

  20. 19
    jcm

    well, i guess running around unbridled may get you lost….
    but i wonder i someone might have cut the bridle…
    HA, probably i’m too paranoid but wouldn’t it be perfect? according to zachary this is kind of a killer blow to bitcoin, either because it makes it undesirable or too vulnerablee. so the ones that are in might want to get out fast, and the ones out won’t get in after this. too much uncertainty and insecurity.
    SOOO… back to credit cards and government endorsed/monitored currency, folks…
    what government is gonna pursue the nice gentleman that herded all the strays back?
    a just one, that is!
    good luck finding it…

  21. 20
    Chrono

    Has anyone considered US Gov forcing a gag order on gox and probably even obtained access to the cold storage.

    Read some of the evidence here: http://www.reddit.com/r/BitcoinMarkets/comments/1z2xo5/speculation_the_us_government_has_control_of_goxs/

    Plus the blockchain has some address that could be goxes they havent been touched, search reddit there are some alternative theories here.

    • 20.1

      Karpèles is a Frenchman. There is no word for “contempt” in the English language that is sufficiently strong to convey the French emotions toward the US government; it can only be expressed in French accompanied by proper shouting and body language.

      In other words, there is little reason to believe he would even consider such an order, not anymore than you or I would consider a gag order from, say, North Korea.

      • 20.1.1
        Anonymous

        in anycase if your theory is correct and this is a massive cheater he can not get away with it because people know much more about bitcoin now and the blockchain can be used to find the truth.

      • 20.1.2
        Guest

        Not all Frenchmen are carbon copies of each other nor sporting the same hatred of America. This is trivially true of any sizable population with a modicum of variance, especially 65 million population. Their former president Sarkozy for one didn’t seem much repelled by USA. And Karpeles is anything but a typical Frenchman. – after all who ever heard of a Frenchman being fluent in any tongue other than French?

      • 20.1.3
        Jorge Stolfi

        AFAIK Japan is a close ally of the US in criminal matters. A gag order from North Korea would have no teeth in Japan, but one from the US would. TheUS has already seized (temporarily?) 5 million US$ of MtGOX’s assets, for example. Moreover MtGOX has subsidiary in the US..

      • 20.1.4
        Ano Nymous

        Why would it matter if he’s French and hates US Govt. when he is in Japan? Japan is essentially an extension of USA judicial territory, so if the USA says “shut the fuck up or you’re dead” in Japan, there’s not much else to do…

      • 20.1.5
        slacker

        Except he did business in the US for serious amounts of money, and the Kim Dotcom precedent shows how the Feds don’t give a f@&k where their border ends in such matters.

  22. 21

    Instead of looking for an external thief, I think the strongest likelihood is that MtGox was using the customer deposits for operating expenses.

    80% of the value of all financial crimes is insider theft.

    • 21.1

      Two points to challenge that assumption:

      1) Before the summer of 2013, there was nowhere else to sell coins to finance your own operating expenses.

      2) the SCALE of it, the SCALE. How do you lose $64M and 850,000 coins just to fund operating costs for a startup?

      • 21.1.1

        Response to your points:

        1) Of course the way to convert customer deposits into operating funds is to sell the deposited bitcoins in the MtGox market itself. The customers are supplying the USD.

        2) Let’s say they were burning $2 million per year and average price of BTC over the past three years was $20. If they spent $5.7 million per year, they would burn right through it. $5.7 million per year is pretty easy to spend for a startup with a big office in Tokyo with 10-20 employees.

  23. 22
    Blockchain Avenger

    This is an interesting wallet address:-

    https://blockchain.info/address/12Nxd2X12WZeYSjUcbtm5NpS3d81Yh8sKh

    If you follow any of those 0.000777 payments, you end up in a wallet with 30,000, 10,000 etc BTC.

    There are about 120 wallets marked by this 12Nxc wallet – probably on the android phone of the thief so he can remember where he parked (I estimate) half a billion dollars of bitcoin.

    • 22.1
      3301

      How did you find this address?

      • 22.1.1
        mike

        “Blockchain.info” has every transaction, all bitcoin are NOT EVER stored on you
        Wallet but in the blockchain.
        You can click away and find every coin ever made and the address it went to.

        I found he is doing the safer thing storing 2,000 coins in each address.
        At least >20 address’s in a few minutes of my time..
        Why do that? With software the private key CAN be found just take’s Time.
        He may lost a few address’s but not most that way. see Google.

  24. 23
    Luno

    Nice writeup, with timeline and details of every rumors and facts.

  25. 24
    PHB

    The whole thing is full of self-deception.

    BitCoin is going to replace the entire economy? What weed are you guys smoking, it must be really good. Why value the Bitcoin at the replacement value, why not the liquidation value. If the coin was sold for cash it is unlikely it could have fetched a few tens of million. Other than Andressen and the Winkelvoss twins, who is dumping $50 million into buying BitCoin?

    To Gox is now a verb, as in ‘she Goxed over a million bucks in that get-rich-quick scheme before she was arrested’. The folk with missing money are now gox-suckers.

  26. 25
    44lemongrove

    Bravo. Very good to see this carefully laid out

  27. 26
    grateful

    Thanks for this great article.

    Focussing on the Coinlab incident you talk about. It is possible that Mark sold other people’s bitcoins for $75 million ($100 * 750,000 bitcoins)? Eureka, that’s the exact number of missing bitcoins!!!!

    That massive selloff, of essentially all the real bitcoins, was him selling what he did not own, initially to cover the selloff, but also possibly, in hopes of an arbitrage opportunity to buy them back when the price fell back below $100. This never happened of course and as Bitcoins went up in value to $1000+, the money was not able to buy bad anything but 1/10th as many coins.

    It is possible that this was a failed “inside job”. That Mark himself sold bitcoins which weren’t his, and lost his shirt in doing this, when he tried to buy them back to cover losses, or that he kept the $75 million hidden somewhere.

    Irrespective of whether or not that speculation is correct, it seems impossible to put together a plausible story that the coins were hacked out or that private keys were lost, or that there is any kind of “gag” order, leaving theft by an insider as the only real probability. The likelihood however is that the insider theft took place not at $500+ per bitcoin, but at a significantly lower valuation.

    • 26.1

      I agree. This seems like the most likely answer by far. The numbers add up. I don’t understand the dismissal of the idea in the timeline. They sold customer Bitcoin in exchange for new customer’s fiat. They sent the fiat to coinlab. They figured they would do some reserve banking for a while till they could afford to buy everything back square. Then Bitcoin shoots up to 1200 and they are in a very ugly pickle.

      • 26.1.1

        The numbers do add up, that’s why I was so interested in that theory first. They even add up very well. But then I backed out a bit.

        The thing that doesn’t make sense with this theory is, where did Gox sell the coins? There was no other exchange at this time that was remotely capable of handling such a volume, nor is there a corresponding volume on other exchanges.

        Did they sell 750,000 newly conjured coins on their own exchange, creating the shortage of goxcoins vs. bitcoins? If so, why? That doesn’t give them any money to pay Coinlab – that just changes data in their own database.

        If they had $75M in fiat deposits, they could use those directly. Selling goxcoins on their own exchange is not going to give them any more fiat deposits.

        If these questions can be answered, it could be a plausible theory.

        Cheers,
        Rick

        • slacker

          For starters, whenever your business holds real money belonging to other people (for the government’s definition of “real”), in nearly all jurisdictions you’re required to keep tight accounting of it compliant with regulatory rules. So if they defrauded their customers’ fiat deposits, it could be discovered even many years later, with the first audit of their accounting books. If, on the other hand, they defrauded their customers’ Bitcoins, there would be no paper trail left behind.

          Assuming they intended just to “borrow” the Bitcoins to deal with their current (expected to be temporary) trouble – and then slowly replace the missing money with profits before anybody noticed – it might make sense to avoid leaving any paper trail.

          Also, people who want to buy Bitcoins usually don’t just have some dollars lying on their exchange account. They transfer dollars to the exchange, then buy. Increased selloff volume would make more buyers send (fiat) money to the exchange to cover a matching volume of purchases.

  28. 27
    BitcoinVictim

    I’ve got 65 btc stuck on Empty Gox. More or less this amount is equal to my life savings ;-(. Is there any chance of getting out my bitcoins off Gox?

    Karpeles, if you read my message (well, I know, but still…), send my bitcoins to my btc address below. Otherwise I hope you burn in hell!

    12j36qrBDafaFrZ8EecKdYG11cYQueAGzv

  29. […] The Gox Crater: Crowd detectives reveal billion-dollar heist as inside job: Rick Falkvinge […]

  30. 28
    Gopher

    Seems like every bitfloor exchange operator gets corrupted by the bitcoins they handle. Look at the parallel with the Bitfloor exchange. That was supposedly “hacked” for 24,000 coins. The operator, Roman Shtylman, made apologetic noises and the exchange came back up. Then Bitfloor had its US bank account closed down at which point it went offline and Shtylman walked away with all the bitcoins still held by the exchange, with no explanation or apology.

    Don’t get fooled into thinking these are nice guys. They are just in it to scam you if they can.

  31. […] case of theft or fraud was involved. Rick Falkvinge, founder of the first Pirate Party in Sweden wrote a comprehensive timeline of Mt. Gox’s actions offering forensic analysis of possible […]

  32. 29
    lplplp

    Hey Falkvinge and Company,

    In this article: http://www.hackingdaily.com/2014/02/mtgox-speculations.html

    Regarding:
    ——
    If we follow the 500,000 Bitcoin wallet, we can see that they make a large transaction of nearly all of the coins are made and sent to a wallet publicly belonging to Gox on the Blockchain as seen below. This can only prove our theory that Gox had been in control of the coins the whole time.

    https://blockchain.info/tx/b269bf1b82dae8a61f7f91dbf7a9d807e30963c1ae00ddd95a8faebea6d0a007
    ——

    If you look at the Gox address: https://blockchain.info/address/1LNWw6yCxkUmkhArb2Nf2MPw6vG7u5WG7q
    You never see that transaction actually hit the wallet.

    Should be here: https://blockchain.info/address/1LNWw6yCxkUmkhArb2Nf2MPw6vG7u5WG7q?sort=1

    You see a break in transactions between 2011-10-14 10:17:20 and 2012-02-25 14:54:30

    Approx. 4 mos of missing transactions, including the 500K transaction?

    What am I missing here?

  33. 30
    Sutter

    As someone who believes (or maybe not only believed) in Bitcoin, this kind of thing is deeply troubling.

    I predicted that Bitcoin would be *the* currency of future decades, restoring at least some amount of control to “the people”.

    What I see instead is a handful of corrupt individuals/entities, like the admins of black markets, law enforcement agencies, and people like Karpeles, running off with an amount of Bitcoins which is worth thousands/millions today could end up being worth billions (or more) if the price of the currency continues to rise.

    In a theoretical future where Bitcoin is the premiere currency of the world, some — if not most — of the richest entities on the planet would be the most crooked. In hindsight, I don’t know what I expected.

    Now if you’ll excuse me, I’m going to go smoke some mail-order weed and probably wallow in existential despair.

  34. 31
    ms_lp

    In the article: http://www.hackingdaily.com/2014/02/mtgox-speculations.html

    Regarding:
    ——
    If we follow the 500,000 Bitcoin wallet, we can see that they make a large transaction of nearly all of the coins are made and sent to a wallet publicly belonging to Gox on the Blockchain as seen below. This can only prove our theory that Gox had been in control of the coins the whole time.

    https://blockchain.info/tx/b269bf1b82dae8a61f7f91dbf7a9d807e30963c1ae00ddd95a8faebea6d0a007
    ——

    If you look at the Gox address: https://blockchain.info/address/1LNWw6yCxkUmkhArb2Nf2MPw6vG7u5WG7q
    You never see that transaction actually hit the wallet.

    Should be here: https://blockchain.info/address/1LNWw6yCxkUmkhArb2Nf2MPw6vG7u5WG7q?sort=1

    You see a break in transactions between 2011-10-14 10:17:20 and 2012-02-25 14:54:30

    Approx. 4 mos of missing transactions, including the 500K?

    What am I missing here?

  35. 32
    andypag

    Can you explain this paragraph in more detail. I don’t understand what you’re describing here.

    (Interestingly, there’s a massive selloff of 750,000 coins at an average price of about 100, totalling $75M, just following this event, suggesting customer coins were fraudulently sold to cover Gox liabilities. However, such a move wouldn’t make sense from a funding perspective, as it doesn’t change the amount customers have deposited in the exchange – if there was $75M deposited already, that could be used directly without a selloff; if there wasn’t, it would not magically appear because Gox sold customers’ coins on their own exchange.)

    Who was selling off the coins? Users on the exchange? Or Gox on another exchanges – there were no other exchanges. If it’s on the exchange then that could also be described as a buy up of BTC?

    Is there a suggestion that Gox sold 750,000 btc to pay off the coinlab law suit and has been in the red ever since? If this is the point when the coins went missing wouldn’t it show in the subsequent company accounts.

  36. 33
    Sten

    Someone “stole” your rows of zeros and ones.

    I think you should contemplate in regards of if any government or judicial body anywhere has the slightest interest in upholding the value of rows of zeros and ones, when the zeros and ones only have a value based up on speculation and the zeros and ones aren’t backed up by any government or international body.

  37. 34
    StarTrekCoin

    Thank you for exploring these ideas so thoroughly. It is my strong opinion that the events at Gox happened similar to the theories you put forward. It is refreshing to move beyond: cold storage loss leakage, mafia conspiracy theories and the US government has seized the coins.

    -Is there any evidence that Karpeles has gambling tendencies? Perhaps he was losing a bunch of coins trading ala Nick Leeson.
    -Who else was involved and profiting from manipulating BTC price? Is there evidence of a trading syndicate? Trading has been manipulated. That has to be obvious and accepted as a fact.
    -Finally, if Karpeles is the sole thief and in possession of hundreds of thousands of ill-gotten bitcoins I don’t think he will derive much pleasure from them. A lot of tech savvy highly intelligent people will hound him for many years. Software could be altered to color his coins or other solutions. In short, I don’t see him buying out a country and becoming emperor.

  38. 35
    Baerenger

    Hi, thanks for all your research into this and I’m sorry for your loss. I had two questions:

    You wrote: “which has already led to multiple tragic suicides over the loss of fortunes”
    But the article you link to doesn’t state that the suicide discussed in it was related to Mt.Gox. Moreover, it only mentions one suicide, not multiple. Do you have other sources?

    Your theory is interesting and I appreciate the thorough documentation. The main thing that I can’t seem to square with your theory is how he could possibly think he could get away with it? (a less persuasive point on my part is that he doesn’t strike me as intentionally malfeasant, though perhaps he became so after he had made some mistakes that he wanted to correct and then crossed the border into criminality.)
    More likely imho is that he screwed up so incredibly badly and either got hacked and didn’t notice it in time, or that he lost access to the cold storage and only noticed this relatively recently. While all the events that you document don’t necessarily support these theories, they don’t directly contradict them either. They could simply be part of other kinds of problems Gox was blundering into and dealing with.

  39. 36
    hmmmm

    I don’t understand why people seem to be ignoring Karpeles’ own blog: http://blog.magicaltux.net/

    I’ve barely started digging into it, but I believe there could be important clues to his past and his personality traits in there. This can help shed light on what type of individual we’re dealing with here.

    Keep in mind: He will probably delete that blog any minute now, so people should copy it before it’s too late. (It’s actually strange he didn’t delete it already.)

  40. 37
    Studabaker

    Why do I have this notion that someone is going to get rolled like the pillsbury dough boy! ?

  41. […] case of theft or fraud was involved. Rick Falkvinge, founder of the first Pirate Party in Sweden wrote a comprehensive timeline of Mt. Gox’s actions offering forensic analysis of possible […]

  42. 38

    Just to be a smartass, since this is digital, wouldn’t this be infringement and not theft ;-)

    • 38.1
      Tristan

      In the Netherlands the Supreme Court ruled that also stealing someones virtual goods is theft. This because also non physical goods might have value, as it involves time and effort to create them. Theft is indeed an infringement on someones property rights; not to be confused however with reproducing goods and intellectual property rights.
      In regards to MtGox it’s a bit more complicated as users voluntarily deposited their bitcoins. Therefor it may also be a fraud or scam, some really serious mismanagement or even the whole lot including theft.

      • 38.1.1
        Google

        ” Theft is indeed an infringement on someones property rights; not to be confused however with reproducing goods and intellectual property rights.”
        Say what?

    • 38.2
      slacker

      Digital or not is irrelevant. The point is the difference between “taking from someone” (i.e. depriving him of it) and “copying from someone” (i.e. making more of it *in addition* to the original).

      So you sound more like a stupidass.

  43. 39

    For those hungry to know when Mt Gox updates on their front page, we spent this week making a free text message service that will text you when the Mt Gox front page updates.

    [https://jerrytherobot.com](https://jerrytherobot.com)

  44. 40
    artekone

    Has anyone suggested the possibility MK was manipulated by common gangsters. Its not like he was hard to find.

  45. 41
    BURN THE WITCH

    WhoIs info for Gox.com has been changed to private 14 hours ago. Mt. Gox loading page shows announcement of intent to re-brand. The plan is in full swing. Do not let this piece of shit get away with your coins!

  46. […] interested in delving deeper into the rabbit hole of Mt. Gox’s Bitcoin loss, check out Falkvinge’s article and the blockchain detective work of Bitcoiners on […]

  47. […] for this flaw to be exploited. So, curious me wonders whose idea that actually was, because as Falkvinge points out, this was almost certainly an inside job. You should go read that whole article, but here’s a […]

  48. 42

    My theory has been that Gox had their assets in fiat while their liabilities where in BTC..

    They sold off 750,000 BTC that belonged to their customers to settle Coinlab, figuring they would pay it back as demanded. Then the ratios between Fiat and Bitcoin went exponentially, and Mt Gox was exponentially 500- 1000% upside down.

    Now customer withdrawals start to happen, and they have to Ponzi in order to maintain the facade.

  49. 43
    Kometes

    Check out my post, further evidence that Karpeles has all the coins minus some minor tx malleability theft:

    http://www.reddit.com/r/Bitcoin/comments/1za9sf/found_at_least_150k_btc_of_mt_goxs_stolen_coins/cfs7a2h

  50. […] zullen zijn. Weer anderen verdenken MtGox CEO Mark Karpeles ervan de bitcoins achterover te hebben gedrukt, terwijl ook wel rekening wordt gehouden met een fatale slordigheid of een inbeslagname – […]

  51. 45
    Ken Neth

    How can the Bitcoin economy grow without trusted third parties? How can Bitcoin go mainstream without trusted third parties? Should every Bitcoin holder, for safety reasons, be required to permanently lock down all of their coins in supercold storage? How does that facilitate trade? How user friendly is that?

    I thought Bitcoin was supposed to be “the money of the internet” — a quick, easy and safe way to move money across borders, making trade easier and cheaper. But with all the thefts happening, most hardcore bitcoiners say that absolutely no one can be trusted, and any significant amount of coins should “simply” be engraved (in the form of QR-codes) in metal bars locked away in fireproof safes inside Faraday cages in steel vaults, just waiting (for years) for their value to somehow magically increase.

    But an increase in value won’t happen unless Bitcoin becomes user friendly enough to be used by the Average Joe for his regular purchases of goods and services. And for that to happen, we need safe, reliable exchanges and other service providers (trusted third parties). And, in turn, for THAT to become a reality, we absolutely need some international regulations and safety nets securing and insuring the crypto-wealth people, for convenience, store on exchanges and online wallets. To put it bluntly: We need secure, reliable Bitcoin banks and -insurance companies.

    Bitcoin MUST become co-opted/”compromised” by the powers that be — if it’s ever going to reach the mainstream. It must be legitimized, legalised and regulated by the central banks and other authorities many of us dislike and wanted to destroy — and, paradoxically, that Bitcoin supposedly was meant to undermine. That’s the only way to achieve truly widespread adoption.

    Make no mistake: Mark Karpeles won’t be the last exchange owner stealing people’s money. This whole Gox thing was only a minor blow to the BTC economy, but when the owners of BTC-e or Bitstamp or other large exchanges end up doing the same thing, the blow might just be a major one, hurting Bitcoin in the long-term.

    • 45.1
      e tam

      Nobody wants to admit defeat, and for many Bitcoin developers and evangelists this would be a defeat, the ultimate defeat indeed. The very purpose of Bitcoin is to provide money which is independent of state authorities, safe from seizure or surveillance, yet accessible to everyone, everywhere, with the ultimate goal of replacing state-issued currencies. Once regulated and controlled by states and central banks, Bitcoin is just a fancy money transfer and notarization protocol, nothing more.

      I don’t say it would be bad (or indeed good) for Bitcoin, coins would probably be still mined, bought and sold, but that this would completely defeat the original purpose of the currency.

      • 45.1.1
        slacker

        Not really.

        I agree that regulated banks and authorities will emerge, but you will still have an option not to use them and take care of your coins’ security yourself. That’s unlike fiat cash, which in large amounts is unwieldy, can be transferred only face-to-face, and is problematic to move in and out of country. This is what bitcoin is about: options.

        And the money supply is still out of control of any central authority. No government can inflate Bitcoin into the ground, as has been done oh-so-many-times with fiat currencies.

        • e tam

          There already are regulated institutions, e.g. most exchanges are subject to all those AML laws. No big deal here. I was talking about the regulation of Bitcoin itself, which may, or may not include debasing or, if you will, inflating.

          Before you say that it’s impossible, mind that Bitcoin is software. Very clever, but still software. And this 21 million limit is not set in stone, but in software. Thus, it can be altered. Of course, now such a change seems unthinkable, but will it be so in 10 years? Or in 20? Nobody knows that. And when states, or the IMF, or something like that steps into the picture, things may very different from what they are today.

  52. […] you’re meddlesome in delving deeper into a rabbit hole of Mt. Gox’s Bitcoin loss, check out Falkvinge’s article and a blockchain investigator work of Bitcoiners on […]

  53. […] handy timeline of MtGox problems from Rick Falkvinge that goes into what happened when. In my eyes, the scenario stinks of MtGox […]

  54. 47
    Anonymous

    Isn’t i ironic that Falkvinge and other pirates loves bitoins to bits despite its fabricated scarcity and inbuilt DRM? Even more ironic is the fact that they have lost virtual profits. In other words according to their previous thinking they have lost almost nothing at all.

    And what about their claims that what one can copy can’t be stolen? Yet they scream loudly about them having been robbed and stolen from.

    • 47.1
      Guest

      Unless you have a monetary stake in copyright and were willfully trolling, I suggest you pause and ponder your life. What you said makes no sense at all unless you understand next to nothing about the copyright debate, Falkvinge’s croonies’ opinions, bitcoin and money in general.

      Shortly and not exhaustively, bitcoin is money, you can’t copy it by design (so if you take it from someone, they have less of it afterwards). Laughing about virtual profits makes no sense either when most monetary transactions around the world are virtual.

      • 47.1.1
        Anonymous

        Guest it appears that it is you who don’t understand the hilarious irony in this case. And as for not being able to copy bit coin well you can. You can even double spend it.

        • Anonymous 2

          No you can’t. That’s the point! If you could doble-spend it, it would be useless. That’s why Satoshi is a genius.

          If I “steal your car”, but your car is still there for you to use in the morning, then I didn’t “steal” from you, I just made a copy. Cf. downloading an mp3 or film vs stealing digital money.

        • Anonymous

          As have been shown several times you actually can doublespend bit coins.

        • Rick Falkvinge

          Googla/Clocky/Grapefrukt, now you’re just being the village idiot. (Also, for the record, your particular way of writing terrible English is recognizable from a mile away.)

      • 47.1.2
        Anonymous

        Rick once again you try to out someone who doesn’t think like you, which actually reflects really badly on yourself-
        As for my english it’s not worse than your ameriswinglish or a lot of your mostly clueless supporters but they don’t get scorned by you. Wonder why?

        As for doublespending bitcoins, well it has happened as you know and is one of the reasons that bitcoinexchanges are crumbling as we speak.

        • Rick Falkvinge

          As for doublespending bitcoins, well it has happened as you know

          Bullshit.

          and is one of the reasons that bitcoinexchanges are crumbling as we speak.

          Bullshit.

          Stop asserting things out of thin air like this. Extraordinary claims require extraordinary evidence. You’ve been hanging around this blog for well over a year just throwing in “the sky is pink with green dots and everybody knows it”-type wrenches into every discussion. You may get a kick out of making others’ days sourer, but those others don’t. In plain language, shape the fuck up. If you’re going to make ridiculous claims, back them up.

          Enjoy the weekend,
          Rick

        • Googla

          OK Rick we understand really really really well that you only want this blog to be filled with comments from people who adore you and never raises anything critical against your often Donald Duckish plans and quarter baked schemes & conspiracy theories.

          Fact is that you have been an insider promotor and lobbyist for the Bitcoinindustry which you as a miner/is has been part of. And instead of excusing yourself you blame those who you recently had up on a piedestal and you claimed where so smart and successful that nothing could go wrong. But yes accordingly the blue cupboard showed up again for you with a not so nice content.

          As for doublespending bitcoin which you seem to think can’t be done. Wikipedia says otherwise.
          https://en.bitcoin.it/wiki/Double-spending

        • Jorge Stolfi

          en.bitcoin.wiki is NOT Wikipedia, please. It is a bitcoin thing.

  55. 48
    Martin

    Timeline since beginning of DOJ Silk Road investigation

    http://pastebin.com/jES4zEuf

  56. 49
    Guillaume Drolet

    I would never spend my money on bitcoins. In my opinion, the risk is way too high.

    I already don’t want to use banks because you never what they might do with your money and governments can just decide they’ll take you money. Just see what happened in Cyprus with the EU.

    Honestly, I think the whole bitcoin story is interested but I’m already sick of money and, all in all, I’m not enthusiast at all about a new monetary system on top of our already existing one. I think people are already obsessed enough about money as it is.

    One of the big problems I see with Bitcoins is that is it seems like most or a big fraction of the people who are interested in it are brought in by greed or because of the illegal nature of their activities. So, I think it’s normal that the currency wouldn’t be going so well when the whole purpose of money (in an ideal world I guess) shouldn’t be to be hoarded more and more but simply be used as a means of trading goods/services and self-regulation of our world.

    I think the lesson to learn from this is: you can never ever trust anyone else than yourself to keep your money. But you have to.

    • 49.1
      slacker

      The point of Bitcoin is that you don’t have to. You can still keep your coins yourself, but then you are responsible for keeping them secure.

  57. […] 8. The Gox Crater: Crowd Detectives Reveal Billion-Dollar Heist As Inside Job – Falkvinge on Info… […]

  58. […] actually believed it was hackers. (Head over to a not-mainstream site that covers Bitcoin, like Falkvinge, and you’ll get an idea fairly quickly about how preposterous that idea […]

  59. […] becomes obvious that security at the billion-dollar vault was practically nonexistent. This adds to previous insights of economic and/or fraudulent […]

  60. […] that. This playout of events is unusually similar (see “Copycat Scam”) to MyBitcoin. After shutting down and claiming hax, they […]

  61. 52
    JoeyD

    http://www.reddit.com/r/Bitcoin/comments/214v2y/mtgox_is_trading_in_530000_bitcoins_from_march_7/

    I can’t read Japanese, but the reddit discussion of the Japanese newspaper article seems to suggest that there is proof mtGox was moving around 530k of bitcoins between the 7th and 10th of march. Add that amount to the 200k and the numbers are starting to add up so to speak.

  62. 53
    Anonymous

    There is another issue that just came up in my mind.

    Gox should be able to find the transactions in the blockchain where the coins went lost. These TX went to Bitcoin addresses. So Gox knows the Bitcoin addresses of all of the scammers. Now, why did Gox send funds to these addresses? They sent the funds because some users told them to do withdrawal transactions. I’m pretty sure that Gox is still in posession of their database where any Bitcoin address that was ever used for withdrawal can be linked to a Gox account. So Gox knows which Gox accounts were used for this scam. Mt. Gox is in posession of identity information for most (albeit not all) Gox users. So Gox has the names, addresses, ID card copies, and proofs of residence of many of the scammers which were involved in this exchange robbery. They know who has stolen the money.

    But why don’t they try to recover the money from the thieves? I mean, they could sue them / freeze their accounts / report them to the police / etc.

    But they aren’t even trying to do it. They just sit there and accept the “reality” that the money is gone.

    Honi soit qui mal y pense.

  63. 54
    I_Didnt_Do_It

    It was probably a government or an agency of one. China? USA? Russia? CIA? NSA?

  64. 55

    I am really delighted to glance at this weblog posts which carries tons of useful
    information, thanks for providing such data.

Add a Comment

9 × = 18

On Facebook

Popular Articles

Photo credit – Dr. Frankenstein's dream II by Joaquin Casarini
4

Activism – Nozomi Hayase

Activism – Nozomi Hayase

More in Cryptocurrency

39

Activism – Nozomi Hayase

Activism – Nozomi Hayase

Earth view taken by US Astronaut Terry Virts, Flight Engineer for Expedition 42 on the International Space Station Jan. 30, 2015 by NASA/Terry Virts.
16

Civil Liberties – Nozomi Hayase

Civil Liberties – Nozomi Hayase

https://www.flickr.com/photos/btckeychain/9510887345/in/photostream/
21

Cryptocurrency – Nozomi Hayase

Cryptocurrency – Nozomi Hayase

Bitcoin concept
14

Cryptocurrency – Nozomi Hayase

Cryptocurrency – Nozomi Hayase

Bitcoin concept
15

Cryptocurrency – Nozomi Hayase

Cryptocurrency – Nozomi Hayase

Bitcoin concept by Antanacoins. CC-By-SA, Flickr.
44

Cryptocurrency – Charlie Shrem

Cryptocurrency – Charlie Shrem

Other Recent Headlines

Swarmwise in Czech
19

Swarm Management

Swarm Management

error451
3

Copyright Monopoly – Martin Doucha

Copyright Monopoly – Martin Doucha

Printing Press
54

Freedom of Speech – Zacqary Adam Xeper

Freedom of Speech – Zacqary Adam Xeper

liberator
8

Civil Liberties – Christian Engström

Civil Liberties – Christian Engström

Open water - Photo by Flickr user elisfanclub
14

Reflections – Zacqary Adam Xeper

Reflections – Zacqary Adam Xeper

handcuffs
32

Quality Legislation – Zacqary Adam Xeper

Quality Legislation – Zacqary Adam Xeper

About The Author

Rick is the founder of the first Pirate Party and is a political evangelist, traveling around Europe and the world to talk and write about ideas of a sensible information policy. He has a tech entrepreneur background and loves whisky.

More On Infopolicy

US Capitol Buildings
24

Quality Legislation – Nozomi Hayase

Quality Legislation – Nozomi Hayase

PyramidCapital
36

Diversity – Zacqary Adam Xeper

Diversity – Zacqary Adam Xeper

Money cut into pieces - Photo by Flickr user Tax Credits
90

Swarm Economy – Zacqary Adam Xeper

Swarm Economy – Zacqary Adam Xeper

Adobe the leech - original photo by OakleyOriginals on Flickr
180

Swarm Economy – Zacqary Adam Xeper

Swarm Economy – Zacqary Adam Xeper

peter_sunde_0237
74

Swarm Economy – Lionel Dricot

Swarm Economy – Lionel Dricot

solarroad
16

Swarm Economy – Zacqary Adam Xeper

Swarm Economy – Zacqary Adam Xeper

NSA Seal Holding the Heartbleed Logo
40

Infrastructure – Zacqary Adam Xeper

Infrastructure – Zacqary Adam Xeper

Bottles of Snake Oil - Photo by Jagrap on Flickr
32

Copyright Monopoly – Zacqary Adam Xeper

Copyright Monopoly – Zacqary Adam Xeper

facebook
12

Swarm Economy – Zacqary Adam Xeper

Swarm Economy – Zacqary Adam Xeper

523377_63619557
4

Infopolicy – Henrik Brändén

Infopolicy – Henrik Brändén

photo_10071_20090418-646x363
71

Copyright Monopoly – David Collier-Brown

Copyright Monopoly – David Collier-Brown

National_Security_Agency_headquarters,_Fort_Meade,_Maryland_public_domain_image
170

Infopolicy – Christian Engström

Infopolicy – Christian Engström

"God Hates Signs" next to "God Hates Fags" protesters
8

Freedom of Speech – Zacqary Adam Xeper

Freedom of Speech – Zacqary Adam Xeper

Many different currencies - CC photo by epSos.de
46

Diversity – Zacqary Adam Xeper

Diversity – Zacqary Adam Xeper

le_tresor_rackham_le_rouge_1280x1024
12

Copyright Monopoly – Lionel Dricot

Copyright Monopoly – Lionel Dricot

Valve mechanism
101

Freedom of Speech

Freedom of Speech

Books before copyright
100

Copyright Monopoly – Johnny Olsson

Copyright Monopoly – Johnny Olsson

Collaborative whiteboard at OuiShare 2012, full of wonderful ideas for venture capitalists to ruin - photo by Natalie Ortiz
20

Swarm Economy – Zacqary Adam Xeper

Swarm Economy – Zacqary Adam Xeper

Border Patrol In Montana
26

Activism – Travis McCrea

Activism – Travis McCrea

Spices - Marrakech 09 Souks
63

Swarm Economy

Swarm Economy

This publication is protected under the Constitution of the Kingdom of Sweden. Any problem you have with this publication remains exclusively yours. Accountable publisher: Rick Falkvinge.
All text on this site is Public Domain / CC0 unless specifically noted and credited otherwise. Copy, remix, and inspire. (Troll policy.)
Log in | Original theme design by Gabfire themes (heavily modified)