Ask HN: Where are the 750k Bitcoins lost by Mt. Gox?

So do you think that these 429k bitcoins were all sent through a tumbler? Now that would be interesting information.

Can we verify this? Obviously we can't trace the outputs, but can we look for patterns that suggest the use of tumblers/mixers?

Good find!

How many of those did you trace? Can someone automate this trace?

Or if not, can we start listing all the addresses and the transaction chains to get there?

[Update] Here's a doc if anyone else wants to work on this manually: https://docs.google.com/spreadsheet/ccc?key=0AguUOoH79qm7dFl...

[Update] Forgot to make it editable. Now it is editable.

To reply to a recurring line of thought, Bitcoins are not atomic entities with serial numbers like dollar bills. You can't say "Bitcoin #AE472b was stolen" and then trace it through its life, or blacklist it.

Instead Bitcoin is a ledger that details wallets and accounts. The origin of balances came from mining, and then people made transactions that, on the official ledger, transferred some or all of those amounts to other wallets. And on, and on, and on.

Hypothetically, if the community were foolhardy enough to trust someone's list of "recipients of mislaid money" wallet ids, you could blacklist those wallets, or even, through group agreement, force transfers back. But that's where tumblers come in: Tumblers are group wallets that take transactions in from all sorts, and then distribute them anonymously to new wallets you control (after a service fee, of course). Anyone hiding their tracks will of course have used a tumbler, often anonymously run on the Tor network. Do you blacklist or reclaim from every wallet that took an output from a tumbler?

Bitcoin would be toast. Tumblers are something that legitimate users of the currency make use of. You won't get the cooperation of tumbler operators because they are themselves engaged in a very serious crime.

So the trace-ability claim repeatedly being made just doesn't hold when you have legitimate and illegitimate transactions by the millions all intermixed. When bitcoins are transferred...game over. Give up on that thought.

Too glib I suppose, I just meant that if the coins are "out there" they're not actually recoverable, are they? If a bunch of sand falls out of my hand on the beach, those grains didn't disappear but I'm never getting them back again. Then there's the very real question of whether it actually is theft. I would argue no, in the sense that downloading a song isn't theft.

You play in dirt, you get dirty. You want an unregulated purely digital currency with irrevocable transactions, you know it's going to sting if you lose some of it.

I suspect that the bitcoins have been exchanged for something else and are back circulating around. The beauty of the heist is that any bitcoin in circulation invariably passes through transactions where the parties have a compelling interest in not being attached to the transaction.

After finding a stolen bitcoin, unravelling its history back to the Mt. Gox Heist is likely to meet a wall of resistence - e.g. if it passed through Silk Road the parties on both sides will be reluctant to come forward and provide information.

In terms of a tort, is it civil or criminal? Was the loss of the coins by Mt. Gox simply an unsatisfactory business transaction? Supposing there was a theft, how should the bitcoins be valued? By the amount of storage space they consume, by the cost of the resources required to create them? If by some market price, which one - some average at the time of their creation, at the time of their loss, at the time of their recovery, or at the time of the prosecution? Many of those values are zero.

Finally, how many of Mt. Gox's customers are going to come forward and claim ownership if such claims are accompanied by a risk of being asked "And how came you to acquire these bitcoins?"

Unlike fiat currency, no government has an interest in supporting the agreed upon fiction that bitcoins are not a fiction. Stealing cash is a crime because the government has an interest in cash being an asset.

The problem with cryptocurrency is the proportion of black and grey market interests it attracts. With bitcoin, they were there first and good citizens second. Separating good citizens from their money was always going to be an attractive option, probably more attractive than separating participants in the black and grey markets from theirs given the greater potential for more serious reprisals which might accompany theft.

It's been over since the first Bitcoin story on NPR.