Gox Goes Belly-up After Losing A Billion Dollars Without Noticing; Blames Fault In Corporate Bookkeeping Protocols

So it’s more or less official: MtGox, once the world’s largest bitcoin exchange, has died and taken all its holdings with it to the grave. This follows a long string of evasive statements, silence, and strange behavior from the exchange, particularly including bad customer service. The net is full of horror stories of people having lost their money, and claims of a “hack against the vault” are not credible in the slightest – here’s why.

In a chaotic situation like this, it’s hard to know exactly what is true. Here are the claims that seem reasonably factish:

  • The vault of Gox is empty, instead of containing 744,000 bitcoin
  • Gox has halted all trading, deleted all previous communication, and is serving a blank web page
  • The blank web page holds an invisible comment hinting at an acquisition
  • There are claims that the loss of 744,000 bitcoin was due to a years-running hack that gradually emptied the vault
  • Claims that the loss is due to a “hack” appear not credible
  • Previous large “hacks” in the bitcoin ecosystem have been widely believed to be outright scams, but haven’t met the evidence bar for a criminal trial

In persistent rumors of insolvency, “MT Gox” has been pronounced “Empty Gox” for some time in mockery. As it turns out, it’s more true than expected. News this morning says that 744,000 bitcoins are missing from its “cold storage”, its vault. What appears to be a consultant’s crisis report and findings doesn’t list a cold storage wallet at all among assets, indicating the exchange’s vault is empty.

How much is 744,000 bitcoin? In technical terms, it’s a shitload of money. Using the peak exchange rate from two months ago, it’s a hairsbreadth shy of one billion US dollars, with a B.

So the question is; how can you not notice one billion dollars gradually disappearing from your company over several years, as has been claimed to be the case?

The answer is simple: you can’t. It’s practically against the laws of physics to not notice this. You can’t close the ledgers on a fiscal year without every cent accounted for. There would be a faint theoretical possibility it could have taken place entirely within a fiscal year, but even that is improbable to the level of the moon being made of cheese.

Any CEO of a company this size has screens in their office showing real-time key numbers, specifically including financial flows and balances. Frak, I’ve been running a non-profit organization that made it to the European Parliament, and I had a real-time view of every single cent of the organization’s assets, using our homebuilt software Swarmops.

Balance sheet showing assets, liabilities, and equity
Balance sheet, motherfucker. Do you speak it?

So an obvious conclusion is that the claims of a long-running hack emptying the vault are false. It’s not just possible to not notice one billion dollars disappearing. It’s not possible to miss one single dollar disappearing with normal bookkeeping methods.

Live updates to the situation below, as I get them. Timestamps are European.


According to Associated Press, Assange’s lawyers (Thomas Olsson and Per E Samuelsson) will appeal today’s verdict.


The official verdict from the Stockholm District Court, in English, is here.


(No more news from today’s hearing. Liveblog ends.)


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.


VERDICT: Julian Assange is to REMAIN in detention in absentia. Just announced.


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.


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.


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


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.


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.


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.


Press conference in Stockholm District Court, announcing the verdict, is about to start.


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


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.”


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.”


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]


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.


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.”


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.”


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.”


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.


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.”


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.”


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.”


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.”


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.”


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.”


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.


The court takes a twenty-minute break.


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.


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.”


Defense accuses Prosecution of being plain lazy in not going to London to hear Assange. “It’s too much work.”


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.


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.”


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.”


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.


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.”


Defense: “There has never ever been a statement from Assange to refuse a hearing.”


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.


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.”


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]


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.”


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.”


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.”


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.”


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.”


Defense criticizes Prosecution that any unclarity must speak to the favor of the defendant, rather than in favor of use of more force.


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).


Defense calls on European Convention on Human Rights point 5.3, the presumtion of innocence.


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.”


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.


Defense opens.


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.”


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.”


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


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.


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.”


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


Prosecution appears trying to define political asylum as a “flight risk”.


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.


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.”


Prosecution begins talking about “risk of flight”.


“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.


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.


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.


Still waiting. More nothing.


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.


We’re still standing outside room 27 with no sign of what’s happening behind closed doors.


We of the public are standing waiting outside room 27 in the Stockholm District Court.


Network is painfully inadequate. (Testing.)


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.


Parties greet each other. The court starts off by closing its doors and chasing everybody out, to resume public parts later.


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.


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.


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.


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




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.


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).


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


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.


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.


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.


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.


According to Sampo Smolander in the comment field, Finland is not taking any seats with 0.5% of the votes.


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.


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.


It’s going to be a while until results come in. Expect meaningful news at about 2200.


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.


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.


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.


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


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.


Added the CoinLab lawsuits and the 2011 proof-of-solvency to the timeline. They are both relevant in context.


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


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.


It’s possible to watch Mark Karpeles in the Japanese press conference declaring the bankruptcy. His body language is interesting to observe.


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.


Live updates, additions, and/or corrections will be posted here as the story keeps unfolding. All timestamps are European.


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.


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.


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.


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.


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.


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”.


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.


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.


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.


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.


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


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”.


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.


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.”


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.


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


Testing after having configged Meteor better (hopefully)…


Testing, foobar


Testing II – why is Meteor not updating?


Testing aplenty – is the new Meteor up?


(End of liveblogging session. This page will not update further.)


I will publish a longer article about today’s events in about an hour.


Last question from the press – press conference is ending.


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.


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


EPP: It appears that the Polish EPP delegates voted against ACTA, breaking party lines.


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.


Amelia Andersdotter is applauded from the audience, as the first speaker getting that treatment.


“This was the first time that the citizens of Europe won against combined forces of big industry and the Commission. Epic, really.”


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.


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


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?


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.


Still can’t move my left foot without searing pain.


“Second lesson: Parliament needs to be better at engaging with citizens.”


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


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.”


“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.”


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.”


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


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.)


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 :/


“Could I ask the journalists to leave the room…” the room is in disarray. Moving to press conference room.


The recommendation to reject ACTA PASSES, in a 19-against-12 vote! WE WON! WE WON!


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.




Amendment three is re-voted, and it is rejected 19 to 12. WE WON!


It is now clear that INTA will recommend a REJECTION of ACTA with a safe margin!


AMENDMENT THREE FAILS, 13 VOTES FOR AND 19 AGAINST! This, however, is 32 votes, one too many.


“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.”


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




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.


“Establishment of instrument for stability”, six amendments. Still not ACTA.


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.


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


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


Test – do I have enough bandwidth, here?


Still not voting on ACTA.


Bandwidth is becoming scarce in the room, indicating that we’re approaching today’s main attraction.


Another item. Still not ACTA. 58 amendments.


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!


“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.


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.


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.


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.


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


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.


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.


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.


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.


According to Jeremie Zimmermann with la Quadrature du Net, all the MEPs from party groups opposing ACTA are present in session.


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.


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.


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.”


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.


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.


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.


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.


Voting has started. The chair warns of a long list of items today. ACTA is last.


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]


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.


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.


Jeremie Zimmermann from La Quadrature du Net is also here in the room.


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.


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.


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.


Testing on reinstall of Peregrine with separate SATA controller.


Ok, live updates (refreshless) seem to work again. It was really a very simple error.


(Yes, I’m still testing.)


Except perhaps Game of Thrones.


Indeed it was. And that concludes the postmortem of this session. Nothing more to see here.


Testing again. Looks like it was a simple case of PEBKAC.


Testing April 16.


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


Testing CloudFlare interference.


Testing meteor.


Ping meteor server.


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.


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


Now: Cory Doctorow!


I’m not sure if the live updates work on all browsers.


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.


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.


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.


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.


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


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


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.


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.


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


Three TV interviews later. Interest remains high.


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.


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.


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.


Final test before disabling post


ooh aah, a little bit more


Testing a little bit more


Demoing more




Demoing more


Update, showing off as demo


Testing la la la


And more – foo


Testing again


Testing after installing Meteor


Final test


Testing again


Testing. Start.

“I wonder how much money Hitler had with Mt Gox. Expect to see a video soon.” — Martijn Meijering

Now, as far as we know, all of these are unconfirmed claims, with the exception of Empty Gox going essentially offline. In their trailblazing PR strategy that will surely rewrite the handbook of corporate communications, they master the situation by not communicating a single shred at all.

There are hopeful rumors that a competent management will buy Empty Gox. I have to shatter your hopes here – that concept is a contradiction in terms. Nobody competent is going to take on one billion USD in debt for this brand. Look at other startups; which ones of them sell for $1B or more?

Yeah, I’m one of those who lost coins stuck at Gox. About 160 of them. As soon as I saw the writing on the wall, before the many but after the savvy, I started trying moving coins home… but most of the withdrawals failed, and could be retried only after a week. After a couple of weeks of withdraw/retry cycles, withdrawals didn’t exist anymore.

May Empty Gox burn in hell. Long live Bitcoin.

Oh, and as for the title, “blames fault in corporate bookkeeping protocols”? That’s well-deserved mockery of when Empty Gox tried to blame the bitcoin protocol for having to halt withdrawals due to “transaction malleability”, as I’ve written about before. It’s not anywhere near the level of mockery they deserve for cratering a community and clientele like this, but I do what I can. I’ve got a ton of frustration to take out on them, and I’m not done yet.

Rick Falkvinge

Rick is the founder of the first Pirate Party and a low-altitude motorcycle pilot. He lives on Alexanderplatz in Berlin, Germany, roasts his own coffee, and as of right now (2019-2020) is taking a little break.


  1. Andy

    This is just fucked up. Im out. Do not believe in bitcoin anymore. 🙁

    I “Only” lost 150BTC…..

    1. Leon

      Sorry that you lost so much, but why would you store so many Bitcoins with them???

      That’s like giving a lot of cash to someone you don’t really know.

      1. Andy

        You are of course right… I had more on other places but I am now totally out the bitcoin market. It was fun but I have lost confidence. Maybe Litecoin takes of but I will think it through many times before investing in that.

        1. Shane

          Seriously. If you didn’t know GOX was laundering money, you should have. If you kept your money in there after the USA seized their banks, why? It reminds me of that story about the guy who died in a flood. He sees the water rising, and thinks to himself “God will save me”. The water gets up to his door, and a guy comes buy in a rowboat offering him a ride. He says “No thanks, God will save me”. Finally, he’s up on his roof and a helicopter offers to save him. “No thanks, God will save me”. And finally, in heaven, he has the audacity to ask God: How could you do that to you? Why didn’t you save me? To which God replies: I sent you a boat and a helicopter! There’s no saving some people!

  2. ComeOnMate

    Hey – confirmed where???

    look at mgox.com and bitstamp announcements, it’s not clear what has been lost and the leak seems uber fake!

    Come on falkvinge, no fud from you please.

    1. dookie

      Hehe, correct, yesterday we had one of the highest volumes in the history of btc and the price closed up. I think this is all some sort of a game for largest exchanges, to get more coins. Story that the Gox lost 750k btc sounds like a fairy tale.

  3. Aelius Blythe

    MT Gox: “a decision was taken to close all transactions for the time being in order to protect the site and our users”

    …protect the site and our users.
    ……PROTECT the site & users.

    I want to laugh, but it’s just so incredibly not funny. Talk about too little too late. What a fuckup.

    1. Rick Falkvinge

      Calling this a “fuckup” is on the order of saying that the Titanic had a small leak.

      It’s a glass crater the size of a continent.

      1. Aelius Blythe

        Yeah….. I don’t even have words…

  4. Zirgs

    What are you complaining about?
    BTC is not regulated by evil gubment and central bankers so the actions of MtGox are perfectly legal.
    Free market worshippers got exactly what they wanted – free and unregulated market where anything goes.
    And that means that anyone can just vanish with all your money and you can’t do anything about it.
    And obviously that kind of marker attracts con-men and thieves like a magnet.

    I can actually understand them.
    They see that BTC price is falling.
    Their profits are falling too.
    So why not take all the money and run?

    And absolutely no one can stop other exchanges and BTC businesses from doing the same thing.

    1. V6MvBaKd5E

      Free Market doesn’t mean you can’t take legal actions. Your comment is ridiculous.
      And more than anything governments actually hurt bitcoin exchanges with their regulations.


    2. TG

      On the plus side, Joe Taxpayer hasn’t had his pockets emptied to the tune of one trillion…

    3. Zirgs

      Well, you can’t take legal action if there are no laws.
      You can only try to catch and lynch that Karpeles guy, but that might be illegal in your jurisdiction.

    4. Scary Devil Monastery

      Your point being?

      Here’s the really interesting bit about this whole affair. Bitcoin is now more traded than ever. For all intents and purposes, the demonstration that Bitcoin can gain and lose in real-life value has attracted enough brokers playing it cool that bitcoin is now back and rising already.

      In short, the currency has now passed the trial by fire with flying colors.

      “And absolutely no one can stop other exchanges and BTC businesses from doing the same thing.”

      Absolutely. There will always be Enron’s, MtGox’s and Satyam’s in the world.
      That has absolutely nothing to do with in what currency they pull their scams.

      Not that you care as long as you can prop some stunningly obvious absolute up as a straw man to shove before your failing logic.

      1. Zirgs

        bitcoin is now back and rising already.
        Obvious price manipulation is obvious.
        Exchanges are just fucking with you.
        Has anyone seen their backend code?

  5. Z

    As a fellow Scandinavian who might’ve lost some BTC and, more importantly, some EUR to the Gox scam, I’d like to ask you if you’re aware of any multi-plaintiff lawsuits that we can partake in? I’m aware of suits strictly for residents of the US and UK, but I’m wondering if it’d be wise for us in other regions to also try pressing charges against Mark Karpeles? (If things don’t somehow resolve quite soon, that is.)

    1. Zirgs

      What lawsuits?
      Is there a law that prohibits bitcoin theft?

      1. Z

        If you’d actually read my post, you’d noticed the word “EUR”.
        EUR = Euro = fiat money. Not Bitcoin.

        And yes, I believe there are laws prohibiting theft of fiat money.

      2. Duh

        Yes. There is no law that prohibits “money theft” per se, it’s “theft”. All in one package. Stealing game currencies have been on courts too.

      3. gurrfield

        It could be theft, it could be fraud, there are many crimes which are not exclusively tied to any specific currency.

        1. Zirgs

          It can’t be a fraud if there are no regulations or laws.
          You, libertarians and free market worshippers wanted government to stay out of your bitcoin dealings – that’s what it’s doing.
          So don’t ask them for help now.

          What’s next – are you going to sue Silk Road too?

    2. Rick Falkvinge

      At present, one of two things will happen, and they will both happen in a few weeks.

      The first option is that somebody values the brand, customer base, and future opportunity to higher than current liabilities, in which case Gox may find a buyer (who, no doubt, will throw out most if not all of the current management). If this happens, it is likely that previous accounts will be solvent as part of a rebuild and buyout process, like how Gox bought out the Polish exchange Bitomat after they had erased their vault wallet with 17k BTC in 2011.

      The second option is that a creditor or client files for bankruptcy of Tibanne, Ltd. Preparing such a filing takes a week or two, at which point it will enter liquidation proceedings, where people may or may not get part of their holdings back depending on Japanese bankruptcy law and other creditors.

      In any case, there’s no point in being in a rush with legal options given these two roads ahead. I’d prefer to stand by for a day or two to watch how things develop.


  6. adsfasf

    mmeijeri twitter link is broken (starts “fhttp://…” rather than “http://”)

    1. Rick Falkvinge

      thanks, fixed

  7. Maria Karpeles

    I am sorry Rick, but anyone who still had money at Gox in January is nothing but a greedy moron. Greedy, because they wanted to take advantage of the price difference, moron because they didn’t see the writing on the wall….

    I mean come on, my son is bouncing on a big blue ball while giving a business interview and you trust him with your money? I think Mark did a vafour to the community, he divided morons from the normal people and gave a valuable lesson, and it is better now in the beta phase, then after the 1st version’s release….

    I will post pictures of Mark living the high life thanks to you guys. Thanks again, now I can fly first class anytime…

    1. Rick Falkvinge

      What other victims of crime do you describe in that way, I wonder? “Greedy morons”?

      1. Caleb Lanik

        Oh, rape victims get a similar response: “If you didn’t want to get raped you shouldn’t have worn that skirt.” Apparently going about your lawful business in a way that might provoke criminals makes it your fault.

        1. Zirgs

          If you didn’t want to lose your money maybe you should not have invested it in unregulated and lawless market?

      2. Ole Husgaard

        Greedy I know you are not.

        Moron? Maybe in this case. You have a currency which almost requires no trust. And you trust large amounts of it to another entity, just because you are too busy/lacy to find out how to store it securely yourself.

        If I understand you correctly, you used MtGox as a bank. Banks cannot be trusted. And exchanges without any regulations or reserve requirements – in particular exchanges not willing to share audit reports – deserves even less trust.

        But I know you learn from experience. Not all do, but you do, and I respect you for this too.

        1. Googla

          How do you know that Rick isn’t greedy? Some of his posts really contradict your beliefs. The only thing he seems to be generous with is other peoples intellectual properies.
          And he calls himself an ultra capitalist and often seems to be really envious of those who have made themselves fortunes.

    2. Iz U Serious Bro?

      Lots of people were trying to get their money out long before this happened, but THEY COULDN`T.

  8. Zirgs

    Rick – do you know what’s a deposit insurance?

    1. gurrfield

      Yeah, those have worked wonderfully well throughout history now, haven’t they?

  9. dgh

    What if MT Gox actually wanted to buy Whatsapp, but they sent the cold storage with the bitcoins and that wasn’t enough, and now they claimed they got “hacked”? They could’ve bought 1/20th of the company…

  10. Thomas

    To my understanding, you have been around in this scheme for quite some time. Just guessing, but what was the exchange rate when you bought the 160 bitcoins – 1 dollar? So your loss is 160 dollars, to bad for you. But not the end of the world.
    And as Zirgs wrote, this is the downside of cryptocurrencies.

    1. Rick Falkvinge

      That’s not how basic addition and subtraction works, or for that matter, basic bookkeeping.

      If I had an asset yesterday that I don’t have today, then there’s a loss in between those two days. Anything else is an attempt to rationalize by conjecture.


      1. Thomas

        Interesting discussion on financials, investments and the concept of value. I can understand and respect your standpoint. But still, at the end of the day, you have lost 160 dollars.

        1. Caleb Lanik

          There are several things wrong with that, Thomas. First, you have no idea how much per coin Rick or anyone else paid. Second, had Rick been able to get his coins out when he first requested them they would even today be worth over a hundred thousand euros, and quite a bit more had he sold them at their peak. He does not have an asset worth that amount of money today because MT Gox basically stole a billion dollars from their customers, and then blamed it on hackers.

      2. Googla

        This is ironic in a heavenly way. The ultra capitalistic pirate getting bitten in the one place where it hurts. Right in the wallet!

    2. gurrfield

      ” And as Zirgs wrote, this is the downside of cryptocurrencies.”

      Centralized institutions for exchanging / lending / borrowing money can exist no matter the currency, and there is always a risk for failing / someone you trust turning out to be a criminals / hacking etc.

      This has nothing at all to do with bitcoin or other crypto currencies as such. You still have no idea what you’re talking about Thomas.

      The people behind this can still be charged with fraud / computer intrusion even without “regulations”.

      1. Zirgs

        My deposit in my local bank is fully insured by the government.
        Deposits in gox and other exchanges are not insured and regulated at all.

        1. TG

          And why should every man, woman and child be forced to bear the downside risk of your investment?

        2. TQ

          What little you know. There are TRILLIONS in deposits, and yet the government has only hundreds of millions (or at best, a few billion) in that insurance fund. Good luck with that.

        3. Z

          Fully insured, huh?


          Good joke!
          Read up on fractional reserve banking and how the modern banking system works.

        4. Zirgs

          Of course, but it’s extremely unlikely that all the banks will collapse at the same time.
          In that case we’ll be in deep shit anyway.

          But if one bank collapses/gets robbed/whatever, then the depositors can get their money back without any problems.

          And no – women and children do not bear the risk.
          Banks themselves are required by law to make regular payments to the deposit insurance pool.
          Just like you are required by law to buy insurance for your car.

          And this has been a standard practice for more than 80 years.
          Bitcoiners are just trying to reinvent the (square) wheel.
          Existing financial laws are there for a reason.
          Read a friggin history book.

        5. gurrfield

          It is still only “ensured” in some specific currency stated by that government. If the value of people’s savings plummets because the value of the currency as-such plummets, then there’s no use to have such an ensurance.

          There’s a reason why economists and bankers buy so much mass media space to bash Bitcoin and other crypto currencies. They’re getting scared that they are about to lose their gravy train position over storage and transactions of money.

        6. Scary Devil Monastery

          We latest saw the flawed premise in this 2009.

          In short, the “guarantee” issued by the government is simply that if the bank fails every citizen will be robbed in order to cover the loss.

          And the bank guarantee in that form actually only holds for Sweden.

        7. Parakletos

          Zirgs — what if you have more money than the limit of the FDIC insurance? You must spread your money around to multiple banks. The moral of this story is to NOT keep all your eggs in a single basket. As most of us should have learned from our parents or school when we were children.

        8. Zirgs

          I’m not in America.
          But the limits are usually pretty high – 100k euros or so (And in some countries like Ireland there is no limit).
          Most ordinary people do not have that much money anyway.
          And if you have more than that then you should invest that money and not just sit on it..

        9. gurrfield

          Zirgs: You still don’t respond to what would happen if people didn’t accept euros for payments anymore.

          Guaranteeing people will get 100 000 grains of sand won’t make anyone happy, unless other people accept sand as payment.

          The value of a currency is that other people want it. If people stop wanting it, it becomes without value.

        10. Jon Hendry

          TG wrote: “And why should every man, woman and child be forced to bear the downside risk of your investment?”

          In the US the FDIC is funded by insurance premiums and other fees charged to insured banks. If needed, the FDIC can levy additional fees against insured banks to shore up depleted funds.

        11. Jon Hendry

          TQ wrote: “There are TRILLIONS in deposits, and yet the government has only hundreds of millions (or at best, a few billion) in that insurance fund. ”

          As of 2012 there were about $10 trillion in US deposits, though not all of that was FDIC insured. The FDIC is required to keep a reserve equal to at least 1.15% of insured deposits. So, about $115 billion, in various forms.

          It’s quite unlikely that all 7,000-some insured banks will fail at the same time, and in such a way that no banks are available to come in and take over the failed banks’ accounts. That’s how insurance works, you know. The FDIC managed to come through the 2008 financial crisis pretty well, and – at least via the FDIC- I don’t think it cost taxpayers anything.

  11. pohutukawa

    So who stole these BTC?

    1. Dr. Watson

      Aren’t the bitcoin transactions traceable? Just follow the money….

      And lets disclose the criminal(s) account…

  12. Max Pont

    Who has the most to gain – apart from the corrupt management? Answer: The US/military/banker elites who want to discredit bitcoin. Is this a result of sabotage by the cyber-warfare intelligence agencies?

    1. Rick Falkvinge

      There is indeed an old Latin question that explains phenomena by asking Cui bono?, meaning “Who benefits?”.

      But there’s another Latin saying that may be more applicable here: Exponere, ne malitia quando stultitia poterit explicare, meaning “Explain not with malice, when stupidity suffices”.

      1. hmm

        So you seriously think Mark Karpeles was stupid enough to not notice that over 700k BTC, the entire holdings of his company, just vanished into thin air over the course of several years? (Assuming that the leaked document is true, of course.)

        1. emma

          Mark is definitely not stupid. He understands bitcoins as in knowing they have no legitimate value and hence laws are sketchy surrounding them.

          He’s been very methodical in the way he has conducted business in the past, like not keeping up with new bitcoin TX standards for a good reason. Also, he’s done a good job blaming the dev-group and their code.

          Keeping his secrets to himself, all the while people are freaked out about their money. Mark just goes about his life as if nothing is wrong.

          Just another psychopath run amok. Such great fun for Mark and he’s loving it.

          No more bitcoins for me.

      2. Ole Husgaard

        Another phrase that comes to mind: caveat emptor

        Management at MtGox was IMHO incredibly stupid. And at last trying to hide the facts. The phrase “criminal neglect” comes to mind.

        Blaming it on somebody we do not like is easy. But it may not be right.

  13. le chuk

    Eat this “pirate”.

    And after all, bitcoin is just another type of torrent. Let it be copyleft 😉

    1. Caleb Lanik

      Bitcoins are in no way just another type of torrent. That sentence doesn’t make any kind of sense.

      1. Googla

        Face it Caleb. le chiuk is right.

        1. Scary Devil Monastery

          He is right because the analogy he’s using is completely wrong?

          Ah, copyright cult logic.

      2. Parakletos

        It’s similar enough in its networking model that it can be analogized to torrents. That’s actually just the transport/network layer, though. It says nothing about the sha256d or scrypt aspect of the coin itself, though.

        1. Scary Devil Monastery

          Unfortunately the copyright cult adherents are incapable of telling the difference between open information and secured passwords.

          The same way they are incapable of telling the difference between a media disc and currency.

        2. Googla

          But Scarypants don’t you pesky pingy pirates usually adhere to the information wants to be free dogma?

        3. Zirgs

          Yep, like a true pirate Karpeles just shared Falkvinges coins his friends.
          After all that’s exactly what you are doing on the pirate bay.

        4. Zirgs

          *with his friends

    2. Zirgs

      Rick is advocating free flow of information all the time.
      And his bitcoins just freely flowed to Karpele’s wallet.
      What’s the problem?
      Technology is here – why not use it?

      1. Googla

        I actually don’t think that all of the lost coins went to Karpeles but to people around him and to keep Gox running.

        1. Parakletos

          It’s actually pretty hard to waste half a billion dollars on a small operation like GOX. Karpeles is either playing a game here. He lost the keys. Or the server with the keys was confiscated by authorities. Given the proximity of those New York hearings, I think there’s a good chance they’ve been confiscated.

      2. Scary Devil Monastery

        I’m fairly sure most of us learn at an early age that someone stealing your ATM card is a bit different than someone making a copy of a music tape.

        Do yourself a favor and stop trying to mix the word “technology” into your religious hymns. There’s no way it will fit.

        1. Zirgs

          But pirates are always saying that you can’t steal digital things.
          And that DRM is bad and should be cracked.

  14. Parakletos



    People are speculating that is the wallet involved. I don’t see it. That sure as hell doesn’t look like a slow leak to me. It looks like a wallet that drops to 0 again and again over time. Given the largeness of the amount of BTC, I think it’s probably an exchange wallet. Perhaps even GOX. But where’s the leak? And I notice it dipped below 0 twice — which seems rather odd.

    If Karpeles stole these from people, it’s not the first time. If you go back a couple years ago, he did it before. 500,000 BTC that time. Criminals generally get emboldened by each successful crime. Those initial users had unsalted passwords. Many of them never changed their passwords after the salting was added. And who, better than Mark, would know how to exploit that? All he had to do was release the database information into the wild (just like that crisis paper) to make it look like it was hacked, and then sweep those coins right out of those accounts himself.


  15. Shane

    TM was a 3yr old issue which was on the Wiki for a year. And suddenly, when the SR2 coins are known to be ‘on the move’, the issue comes to the forefront? You might buy that, but I don’t. Karpeles is using that as a convenient smokescreen, and it really couldn’t be more obvious.

    Look –Karpeles is in Japan for regulatory arbitrage. He is not there because he’s Japanese or enjoys the scenery.

    The fraud, in order to be committed, required someone to FALSELY
    claim to GOX (or another exchange) that their coins were never sent, when they actually were. They would need GOX to MANUALLY re-send those coins, in the hopes of receiving them twice. Now how many times do you think that could happen before they notice their cold storage funds depleting? It’s not the least bit believable!!

    I realize that betting with other peoples’ coins/money is Legal in Japan. But I STRONGLY doubt that filing a false police report is. Let’s see if Karpeles is willing to file a false police report…

    Morally speaking, and legally speaking, if they are insolvent, then that proprietary trading engine should be liquidated to make the customers more whole. But you know what? I wouldn’t be surprised if Karpeles’ left hand sold his right hand a copy of the engine for $1, just in case.

  16. curious

    Now, I’m interested in where did the money disappear? DId they pay too good exchange rates up to the point that they had 700kBTC liabilities but not the cash to cover it? Did they try shorting BTC or some other speculative stuff?

    Currently it appears to a layman as just one day MtGox realized that the USB stick they though had 700KBTC was actually empty…

    1. Googla

      I guess Gox cost a lot of money to run and the fees that Gox drew in coudn’t cover their expenses and salaries etc.
      The higher fees that normal banks and exchanges charge do have a reason one is to cover the running costs another is to pay for insurances and security measures.

      1. Parakletos

        Or Mark just stole them?

  17. gurrfield

    You don’t give up on using money because someone has robbed the bank or scammed Forex, no matter if it’s an “outside” or an “inside” job.

    Crypto currencies still work, it’s just that not all services are serious and/or legal – but the same can be said about services related to any other currencies in this world. You can launder and buy drugs with dollars or euros too.

    1. Zirgs

      Seems like that the only sensible thing to do with bitcoins is to keep them in cold storage.
      Pretty much every bitcoin service is a potential fraud.

      1. Parakletos

        If you have a large number of them, then yes. You should keep the bulk of them in a wallet that has never once sent any coins anywhere. And I would suggest that you only keep a fixed maximum in each wallet. It’s just stupid to keep all your eggs in any one basket, even when it comes to regular banks.

        Exchanges are not banks. They are exchanges. But in the absence of a bitcoin bank, many people stupidly rely on the exchanges to act as a bank. Also — the very nature of the 6block confirmation (~1 hour) encourages people to keep their coins on exchanges — just in case they might see a deal and want to grab it. Otherwise, that deal will most likely not be there in 1 hour when the coins arrive.

      2. gurrfield

        Every service is a “potential fraud” no matter which currencies they accept.

        You remember how long it took until people started trusting buying stuff online? Giving their credit card info “out there” to someone they could not see?

        1. Zirgs

          Stop bullshitting gurrfield.
          Of course every service can be a fraud.
          But with bitcoin services the risk of fraud is a lot higher, because there are no regulations, insurance, independent audits or anything like that.
          BTC economy is Wild West.
          Company that I’m working for went through a lot of trouble and a spent lot of $$$ to get PCI compliant for example.
          BTC businesses do not have to do anything like that and that means that it is a lot riskier to deal with them.

        2. Anonymous


          If there is a ‘flaw’ it is in the 6 block confirmation process. That works out to about an hour on the Bitcoin network.

          Because of this delay between the time someone sends you coins, and the time you can spend them yourself, people have developed very bad habits. Why? Because they don’t want to lose out on any deals that may present themselves on the exchanges — whether that be on the buy or sell side. If they wait until they see the opportunity to send their coins to the exchange, then that opportunity likely won’t be there after the 6 blocks needed for confirmation. In other words, they lose out on that chance. Exchanges are not banks. People need to stop using them as such.

        3. gurrfield

          Everyone is an independent audit with bitcoin. A transaction will not be trusted if not enough actors have controlled it. Instead of a central control mechanism to check transactions the mechanism is decentralized. It still doesn’t help stop businesses or people from trying to sell trash to each other.

          Well since the NSA capabilities and attack vectors which were exposed last year it is a valid question if anything electronic and online can be considered “safe”, no matter if you talk about credit cards or crypto currencies. Your safest bet would be to give someone natural resources “live” for exchange of a service or a good live.

          In reality, it is the spying organizations, NSA, FRA and so on which are the “Wild West”. Prime minister of Sweden even said ” I assume they (FRA) follow the law “. It should not be Assumed, it should be Checked!

  18. RS

    I dunno, MtGox was run by people so astonishingly incompetent that the possibility of genuinely failing to notice would, in fact, rank as one of the likely explanations…

    1. Parakletos

      I don’t think so. Go back to when he supposedly lost the 500,000 BTC a couple years ago. That was no heist. That was Mark Karpeles sweeping coins out of old accounts that never changed their passwords. He undoubtedly released the password file into the wild as cover — much as he leaked this crisis report into the wild as cover.

      1. Zirgs

        Are you saying that this Karpeles guy now owns more than 1 250 000 BTC?
        That’s more than 10% of all the BTC in existence currently.

        1. Parakletos

          Yes and no. He is responsible for the ‘loss’ of 1.25mil BTC over the past couple years, if not more. Whether or not he sent them to a secret wallet file of his own, or lost the keys to the wallet file they’re in….who knows. But his own words said that these most recent coins are not lost ‘just yet’. As though they’re dangling over a cliff waiting on rescue. The guy is bad news. He’s in Japan so that he can get away with it legally. But that may not be enough to keep the Russian mafia from paying him a nice visit.

        2. Zirgs

          Russian mafia murdering someone over internet lolbux funny money would be absolutely hilarious 😀

  19. Parakletos


    I found that earlier today — much earlier. And while I think they are wrong about the ‘time lock’, I did find their comment from Mark rather interesting. It looks like:

    “They’re in a time lock. Really. We wouldn’t spend money that wasn’t ours! Honest. Don’t you trust us? Just let me gamble a little more. I promise I will pay you all back. I just need moar time….”

    In any case, the comment was:
    “ Well, technically speaking it’s not “lost” just yet, just temporarily unavailable”“

    Interesting. Why did he put in that ‘just yet’ part? The sentence would have made sense without it. He makes it sound like they’re dangling over a cliff waiting for rescue…

    What’s the difference between these two sentences:

    Well, technically speaking it’s not “lost” just yet, just temporarily unavailable


    Well, technically speaking it’s not “lost”, just temporarily unavailable

    What meaning is added by including ‘just yet’? Is he saying the decision is out of his hands?

    Confiscated by authorities is my guess. And if they find no evidence of any wrong-doing (FAT CHANCE!!), they’ll return them? That would fit with ‘just yet’.

  20. […] was de oprichter van de Piratenpartij, Rick Falkvinge, enkele dagen geleden waarschijnlijk de eerste om er openbaar op te wijzen dat een verlies van […]

  21. Wise old man

    English please, and don’t let the others to manage your money. Greedy people got what they deserved….

    1. Otherwise young woman

      Grammatically correct English? At which you fail. Amusingly so too, as you’ve been trying so very hard to troll this page under different names, yet are recognizably the same person because of the same foreign idiosyncrasies.

  22. yik

    Was Mark Karpeles lying here ? => https://bitcointalk.org/index.php?topic=23938.msg1177353#msg1177353

    What do you think about theses comments => http://www.reddit.com/r/BitcoinMarkets/comments/1z2xo5/speculation_the_us_government_has_control_of_goxs/

    All these are speculations, since there is no official statement. But things could possilbly be more complexe than the fraud that the leak documents allegedly revealed

  23. Zirgs

    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.
    Greedy idiots got what they deserved.

    1. Parakletos

      Your lack of compassion is duly noted. I can only hope that misfortune finds you quickly, so that Karma can have a field day.

      1. Googla

        Parakletos what happened at Gox is Kharma at work doing a fine job.

  24. […] 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 […]

  25. […] Gox Goes Belly-up After Losing A Billion Dollars Without Noticing; Blames Fault In Corporate Bookkee… […]

  26. Karpeles: Why we won’t see another criminal | Minken

    […] makes any claim of his that 850,000 bitcoins were pilfered from his accounting books (which, as Falkvinge points out, is completely unreasonable) seem even more full of […]

  27. fixed rate secured loan

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