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Former Mt. Gox CEO Heads to Trial in Japan Over Missing Bitcoins

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Re: Former Mt. Gox CEO Heads to Trial in Japan Over Missing Bitcoins

#41

Post by MichaelGG »

fpgaminer wrote: post #39

This article feels wanting. It doesn't cover much of any details about Mt. Gox and instead goes off on tangents about the former CEO's personal life, and the cryptocurrency ecosystem... I'll see if I can make up the gap. I'm no expert on the Mt. Gox story; it's extensive and full of speculation, but here's what I remember. Mt. Gox has suffered multiple bugs, hacks, etc during its existence. But the two significant ev…

> As explained by Mt. Gox, this was due to a hacker breaking into the exchange and stealing a large amount of funds. The drop to $0.01 was caused by the hacker selling a bunch of those coins on the exchange, eating through all the orders on the book.

Wait, you don't need to do anything to MtGox's coins to sell BTC on MtGox if you've hacked them - their coins, as far as the exchange goes, are just records in a MySQL table. So for MtGox's explanation to be true, the hacker would have needed just wallet-access on MtGox, then turned around and sent MtGox's coins right back to MtGox, hoping to cash out via MtGox before MG noticed and undid the orders?

Re: Former Mt. Gox CEO Heads to Trial in Japan Over Missing Bitcoins

#42

Post by frankchn »

fpgaminer wrote: post #39

This article feels wanting. It doesn't cover much of any details about Mt. Gox and instead goes off on tangents about the former CEO's personal life, and the cryptocurrency ecosystem... I'll see if I can make up the gap. I'm no expert on the Mt. Gox story; it's extensive and full of speculation, but here's what I remember. Mt. Gox has suffered multiple bugs, hacks, etc during its existence. But the two significant ev…

> Basically, Mt. Gox would be operating with fractional reserves.

I would not call what happened to Mt. Gox "operating with fractional reserves."

In a normal financial system, fractional reserve banking means that a bank retains X% of its customers' deposits as a "fractional reserve" while lending out the rest to other customers, often with either collateral (home, auto) or high interest rates (credit cards) to mitigate the risk of nonpayment. In this case, the bank can balance its asset (loans) and liabilities (deposits) balance sheet.

In Mt. Gox's case, they simply lost the bitcoins they were supposed to safe keep rather than making loans or anything like that, and are thus insolvent.

Re: Former Mt. Gox CEO Heads to Trial in Japan Over Missing Bitcoins

#43

Post by [deleted] »

frankchn wrote: post #42
fpgaminer wrote: post #39

This article feels wanting. It doesn't cover much of any details about Mt. Gox and instead goes off on tangents about the former CEO's personal life, and the cryptocurrency ecosystem... I'll see if I can make up the gap. I'm no expert on the Mt. Gox story; it's extensive and full of speculation, but here's what I remember. Mt. Gox has suffered multiple bugs, hacks, etc during its existence. But the two significant ev…

> Basically, Mt. Gox would be operating with fractional reserves. I would not call what happened to Mt. Gox "operating with fractional reserves." In a normal financial system, fractional reserve banking means that a bank retains X% of its customers' deposits as a "fractional reserve" while lending out the rest to other customers, often with either collateral (home, auto) or high interest rates (credit cards) to mitig…

[deleted]

Re: Former Mt. Gox CEO Heads to Trial in Japan Over Missing Bitcoins

#44

Post by fpgaminer »

MichaelGG wrote: post #41
fpgaminer wrote: post #39

This article feels wanting. It doesn't cover much of any details about Mt. Gox and instead goes off on tangents about the former CEO's personal life, and the cryptocurrency ecosystem... I'll see if I can make up the gap. I'm no expert on the Mt. Gox story; it's extensive and full of speculation, but here's what I remember. Mt. Gox has suffered multiple bugs, hacks, etc during its existence. But the two significant ev…

> As explained by Mt. Gox, this was due to a hacker breaking into the exchange and stealing a large amount of funds. The drop to $0.01 was caused by the hacker selling a bunch of those coins on the exchange, eating through all the orders on the book. Wait, you don't need to do anything to MtGox's coins to sell BTC on MtGox if you've hacked them - their coins, as far as the exchange goes, are just records in a MySQL t…

Yeah, their explanation didn't make a lot of sense. Mt. Gox was notoriously opaque, and what little they did say publicly was often flawed in ways similar to what you describe.

That said, it's not impossible that, say, a rather young hacker got into Mt. Gox, and naively sold stolen coins during the incident. Most people are not familiar with how exchanges work, and so they may not have known that a large sell order would evaporate the order book. It's important to remember that most people who are adapt at technology do not necessarily have financial acumen as well. It's a tangential skill set.

But yeah, we can speculate in all sorts of ways. Maybe the 2011 hack was fake; a way for Karpeles to pilfer the coffers. Again, hopefully something more concrete will come out of the trials.

Re: Former Mt. Gox CEO Heads to Trial in Japan Over Missing Bitcoins

#45

Post by sctb »

Temasik wrote: post #15

anyone reading this should atleast take a look at iota, it's trying to solve blockchain's problem 1) centralized mining 2) the fees 3) scalability as tx increase 4) fat protocol iota doesn't have any of the above,it doesn't even have/use a blockchain www.iota.org

It's OK to mention stuff you're working on when it's relevant to the discussion, but you've been really overdoing it.

Re: Former Mt. Gox CEO Heads to Trial in Japan Over Missing Bitcoins

#46

Post by galeaspablo »

rtpg wrote: post #27
galeaspablo wrote: post #7

> Bitcoin has suffered hacking incidents including one last year in which a major Hong Kong-based exchange Bitfinex suspended trading after $65 million in the virtual unit was stolen. Quality research. /s This is akin to saying HTTPS was hacked, when YAHOO got hacked.

This is grasping at straws. "Bitcoin has suffered hacking incidents" is clearly talking about the ecosystem having hacking incidents, not the coin itself being hacked. Though I guess you made this comment earnestly, so it wasn't that clear...

Clear for you perhaps. But (anecdotally) every time I explain this to someone in my family, I get the "bitcoin got hacked line".

The article itself is not a HN thread.

A journalist who has done enough research would know the nuances of the cryptocurrency language. Journalists understand that the meaning of their newspaper pieces is hardly dependent on their thoughts while writing. Instead it is tied to the text. It's the journalist's job to educate everyone, and sentences as the above are a barrier to education/adoption/rejection/informed opinions/innovation.

Disclaimer: I haven't owned Bitcoin for years, and I'm bearish on most cryptocurrencies in the short/medium term. I.e. I've got no horse I'm betting on.

Re: Former Mt. Gox CEO Heads to Trial in Japan Over Missing Bitcoins

#48

Post by andrepd »

peteretep wrote: post #23
andrepd wrote: post #4

Earlier quoted context omitted.

How do you mean? Phrases like that have been a staple of journalism for at least 150 years.

> How do you mean? A focus on the salacious rather than the important. > for at least 150 years You seem to consider that a mitigating factor, where I consider it to be an aggravating factor.

I don't, I consider it aggravating indeed. I read your comment as a "journalism these days" sort of rant, when perhaps you meant it more like "it's 2017 and we're still in this stage of bullshit journalism" kind of thing.

Re: Former Mt. Gox CEO Heads to Trial in Japan Over Missing Bitcoins

#49

Post by bpodgursky »

smcl wrote: post #32
bpodgursky wrote: post #26

Earlier quoted context omitted.

In terms of proportion, it is more like if someone walked into Fort Knox to count the gold and discovered that it was all missing. Sure, it doesn't discredit the * concept * of state-backed currency, but it would be informative.

Slightly related - there's weird (probably unfounded) suspicions around gold stored in the US on behalf of some countries. May or may not have led to things like Germany repatriating its gold reserves: http://www.zerohedge.com/news/2017-02-09/bundesbank-has-comp...

Yeah, I was going to use the NY fed reserve bank as an example, but I know about the rumors and didn't want to open that can of worms.

Re: Former Mt. Gox CEO Heads to Trial in Japan Over Missing Bitcoins

#50

Post by microwavecamera »

fpgaminer wrote: post #39

This article feels wanting. It doesn't cover much of any details about Mt. Gox and instead goes off on tangents about the former CEO's personal life, and the cryptocurrency ecosystem... I'll see if I can make up the gap. I'm no expert on the Mt. Gox story; it's extensive and full of speculation, but here's what I remember. Mt. Gox has suffered multiple bugs, hacks, etc during its existence. But the two significant ev…

Good write up. This was more interesting than the article.
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