Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Mt. Gox Receives Subpoena From Federal Prosecutor: Source

online.wsj.com

Post reply on HN
Print view View original

81–90 of 107 posts

Re: Mt. Gox Receives Subpoena From Federal Prosecutor: Source

#81

Post by ewoodrich »

appleflaxen wrote: post #43

Where were these zealous prosecutors during the global financial meltdown in 2008? It would be nice if people went to jail for fraudelently representing mortgages. I'm fine with Gox getting investigated, too, but justice shouldn't depend on who you are.

"Federal Government and State Attorneys General Reach $25 Billion Agreement with Five Largest Mortgage Servicers to Address Mortgage Loan Servicing and Foreclosure Abuses"

http://www.justice.gov/opa/pr/2012/February/12-ag-186.html

It's not jail, but then again, I highly doubt Karpeles or anyone at Gox will be imprisoned, either (for a number of reasons).

Re: Mt. Gox Receives Subpoena From Federal Prosecutor: Source

#82

Post by rodgerd »

appleflaxen wrote: post #43

Where were these zealous prosecutors during the global financial meltdown in 2008? It would be nice if people went to jail for fraudelently representing mortgages. I'm fine with Gox getting investigated, too, but justice shouldn't depend on who you are.

They were cheerfully going after targets, until it turned out that the public are easy to convince that effective prosecuters should lose their jobs if they visit sex workers.

The fact the current top comment in this thread is someone slagging off a prosecuter for going after insder traders demonstrates that HN's as dumb an audience as the average tabloid reader when it comes to convincing people that enforcing the law against corrupt Wall Street criminals is a bad thing.

Re: Mt. Gox Receives Subpoena From Federal Prosecutor: Source

#83

Post by malka »

fiatmoney wrote: post #24
ck2 wrote: post #22

New York wants to be the big dog in regulating crypto-currency, which almost feels like they are protecting and working at the behest of the banking industry headquartered there. But I do not understand how a NY prosecutor can subpoena a Japanese business?

Easy, if they think a NY law has been violated.

I'm pretty sure I am currently violating loads of north korean laws. They should subpoena the entiere world.

Re: Mt. Gox Receives Subpoena From Federal Prosecutor: Source

#84

Post by jnbiche »

rwallace wrote: post #60
captainchaos wrote: post #48

Ok, at the risk of sounding completely naive... I've been following this story for a while, and it seems that no one can say for sure if this is embezzlement or gross incompetence. Based on leaked memos it seems to be most people are learning towards the latter, but I'm curious if there's any evidence either way. Based on the claimed transparency of Bitcoin, I would have expected embezzlement on this scale to have be…

My gut feeling, speaking as an outsider reading the news, is Karpeles was never dishonest, just hopelessly out of his depth and too stubborn to ask for help. In the normal course of events I also would expect money disappearing over that long a timescale to have to have been embezzlement by an employee, and I would certainly consider that a plausible hypothesis here. On the other hand, reading the IRC chat transcript…

Thank you for one of the few rational comments I've read about the whole ordeal. And yes, as a Bitcoiner since 2011 (who last dealt with Gox that same year), your assessment of Karpeles is spot on. My impression is that he's not dishonest, just the classic Dunning-Kruger programmer we've all worked with.

The hard thing about accounting for these Bitcoins is that we keep track of them via addresses, but Karpeles was robbed at a lower level of abstraction -- via outputs. So he's probably struggling with that.

EDIT: I should have written that my impression is that he's not a thief. I suspect he has been dishonest about what he's known about his company's situation, in the sense that he's probably lied by commission or at least omission. But I don't think he stole anything.

Re: Mt. Gox Receives Subpoena From Federal Prosecutor: Source

#85

Post by jnbiche »

mattm wrote: post #70
thinkcomp wrote: post #49

I'm not a lawyer, but what's likely to happen here is the following: Soon, Mark Karpeles and/or Tibanne Kabushiki Kaisha and/or Mutum Sigillum LLC are likely to be charged with at least one violation of 18 U.S.C. § 1960 for not having a money transmission license in any state. Even though Karpeles broke state laws, it's a federal crime by extension. He may be extradited from wherever he is to the U.S. to stand trial…

Mt. Gox is in Japan because Mark Karpeles moved to Japan well before Mt. Gox started up. Here is his blog - http://blog.magicaltux.net

That's true. thinkcomp's argument probably should be that the reason the largest exchange is in Japan is because of U.S. regulatory regime. There have been legitimate contenders (TradeHill) who had to shut down because of regulatory issues, or banking issues related to regulatory issues.

That's not even counting the serious entrepreneurs who passed on the opportunity to establish a competent exchange because they knew it wasn't possible to establish one legally without tens of millions of dollars.

Re: Mt. Gox Receives Subpoena From Federal Prosecutor: Source

#86

Post by jnbiche »

thinkcomp wrote: post #49

I'm not a lawyer, but what's likely to happen here is the following: Soon, Mark Karpeles and/or Tibanne Kabushiki Kaisha and/or Mutum Sigillum LLC are likely to be charged with at least one violation of 18 U.S.C. § 1960 for not having a money transmission license in any state. Even though Karpeles broke state laws, it's a federal crime by extension. He may be extradited from wherever he is to the U.S. to stand trial…

>There's only one exception: Greg Kidd, who is invested in a number of payment companies, including Coinbase, and now works for Ripple. http://fedpaymentsimprovement.org/wp-content/uploads/Greg_Ki...

I like this guy. Greg's pdf is well worth reading (and pretty funny at points) if you're interested in this space.

And while I'm not sure I agree with Aaron's tactics, it's clear that there is a huge problem here: it's impossible for new businesses to innovate in the money transmission industry.

Overall, I agree with both Aaron and Greg's assessment of the problem: state money transmission laws are strangling financial innovation. However, I am very wary of placing more power in the hands of a federal government that failed to act in good faith in this space (see HSBC's fines versus the treatment Bitcoin is getting).

And realistically, some sort of unified state money license requirement like the NMLS is a far more likely outcome than letting the federal government to take over these responsibilities altogether.

Re: Mt. Gox Receives Subpoena From Federal Prosecutor: Source

#88

Post by jnbiche »

mattm wrote: post #68
rwallace wrote: post #60

Earlier quoted context omitted.

My gut feeling, speaking as an outsider reading the news, is Karpeles was never dishonest, just hopelessly out of his depth and too stubborn to ask for help. In the normal course of events I also would expect money disappearing over that long a timescale to have to have been embezzlement by an employee, and I would certainly consider that a plausible hypothesis here. On the other hand, reading the IRC chat transcript…

I've spent way too much time following this and I agree with your thoughts as well. Karpeles seems to personify the phrase we know in software development - that he knows just enough to be dangerous but not enough to be competent. I was stunned at this blog post ( http://antonopoulos.com/2014/02/25/statement-on-mt-gox/ ) where Andreas Antonopolous said: "During this time, Mark Karpeles was active on the forums and de…

>He really should not have been looking for solutions himself.

Actually, I think at this point he had waited too late to ask for competent help. Here we have a custom Bitcoin client, written in what is probably a tangled hairball of PHP. The Bitcoin protocol is already fairly complex, and even Bitcoin software written by competent developers using modern software development methods can be tricky to understand (see btcd for an example of a well-engineered client).

How many engineers could fix that in a reasonable period of time?

Add to that the fact that there are only a handful of competent programmers in the world who also are experts at the Bitcoin protocol, and I'm not convinced that he could have convinced any of them to take on the task. Most of them are already wealthy, and they have a lot of reputation to lose by trying (quite possibly in vain) to fix a dying company.

Mark's biggest mistake was in trying to do this all himself once Bitcoin really took off. So yes, a valuable lesson for entrepreneurs.

Re: Mt. Gox Receives Subpoena From Federal Prosecutor: Source

#89

Post by captainmuon »

If the government really wants to kill bitcoin, its a bit surprizing that they are pursuing this legally. Instead they should make it such that people cannot sue for their losses. They should define legally that bitcoin is neither money nor commodity, that it is of zero value, and that this is so obvious that it is impossible to commit fraud with it. It's your own fault if you pay money for something such obviously fraudulent. (Not that this is my opinion!)

If customers would not be able to raise claims, and frauds would get away with impunity, this would quickly destroy any honest businesses in bitcoin, and reduce it to a fringe phenomenon some people use to buy drugs anonymously.

I'm guessing the government really doesn't want to do that, because while it would reduce bitcoin to the underground, it would become even more uncontrolable. Rather, they'll try to canalize it through the existing banking system. Its already hard now to buy bitcoins anonymously, and it will probably become harder.

Re: Mt. Gox Receives Subpoena From Federal Prosecutor: Source

#90

Post by rtpg »

sheetjs wrote: post #77
rtpg wrote: post #75

Earlier quoted context omitted.

this is parroted so often but is usually quantifiably false. Usually the fines are small compared to overall profit of a company because the actions are relatively small compared to total operations, but most fines defintely cost the company more than not doing the actions would have in financial cases.

HSBC paid 1.9B fine for money laundering related to Mexican drug cartels. To understand this number, lets look at the DOJ claims: > Between 2006 and 2009, according to DOJ, HSBC failed to monitor $670 billion in wire transfers and $9.4 billion in cash transactions from its Mexico bank operations. We don't know exactly how much HSBC profited from these specific alleged activities, but even a 1% rate (pretty low if the…

According to HSBC's US site, there's a fixed $30 rate for a signle wire transfer. Mexico's rates are probably less (for reference, here in France it costs me nothing to do a wire transfer within Europe).

I sincerely hope they didn't come out on top of this.

Post reply on HN