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Chinese Bitcoin Exchange Vanishes, Taking £2.5m of Coins With It

Posted by timothy on from the later-chumps dept.

An anonymous reader writes "A Chinese Bitcoin exchange has vanished without trace, taking more than $4 million of the virtual currency with it and leaving profit-hungry investors out of pocket. GBL, the Chinese Bitcoin exchange was launched in May 2013 and putatively based in Hong Kong, despite its servers being registered in Beijing. However GBL's Hong Kong offices do not exist. GBL mysteriously disappeared in early November taking an estimated $4.1m (£2.6m) of Bitcoins with it." (Beware the auto-playing ads, with sound.)

32 of 346 comments (clear)

  1. Sad Trombone? by Anonymous Coward · · Score: 5, Funny

    Yes. Sad Trombone.

  2. Recurring theme? by jythie · · Score: 5, Funny

    I am assuming it is only a minority of exchanges, but doesn't this seem to be a bit of a recurring problem?

    1. Re:Recurring theme? by skovnymfe · · Score: 4, Insightful

      Who cares so long as it's only end users that suffer?

    2. Re:Recurring theme? by slashmydots · · Score: 3, Insightful

      The only pattern is stupid people losing their money. The last time it was sketchy investments that only a complete idiot would fall for. There's no stopping stupid people from being stupid. Without stupid people, the tiny exchange that is obviously Chinese run and thus obviously a scam would have zero customers.

    3. Re:Recurring theme? by Anonymous Coward · · Score: 5, Insightful

      Oh, ooh, I know this one! The difference is that a fly-by-night website will be taking credit card orders, and you can get a chargeback through your credit card bank when they don't show up with the merchandise.

    4. Re:Recurring theme? by Ralph+Wiggam · · Score: 5, Informative

      Banks are insured.

    5. Re:Recurring theme? by jeffmflanagan · · Score: 5, Insightful

      In this case the "bank" is the robbers. This is very different from your typical heist.

    6. Re:Recurring theme? by Anonymous Coward · · Score: 4, Insightful

      Oh the naivety.

      Perhaps you've heard of Barclays, USB, or Goldman Sachs.

    7. Re:Recurring theme? by gaelfx · · Score: 5, Insightful

      You haven't read much news lately, have you?

    8. Re:Recurring theme? by amicusNYCL · · Score: 5, Interesting

      The kind of people drawn to anonymous decentralized currencies aren't the kind that are going to be deterred by measurable financial risk.

      The kind of people who use an anonymous decentralized currency as an investment (and leave their investment sitting in the exchange) are not the typical users of bitcoins. Once you have BTC, why not transfer that directly to your wallet? Why keep it in the uninsured exchange at all?

      --
      "Our two-party system is like a bowl of shit looking at itself in a mirror." - Lewis Black
    9. Re:Recurring theme? by tlhIngan · · Score: 3, Interesting

      I am assuming it is only a minority of exchanges, but doesn't this seem to be a bit of a recurring problem?

      It's the early days. The early days of banking had similar problems as well.

      A bigger issue though is a LOT of exchanges want a LOT of personal information in order to do the exchange.

      The real risk is not one of these exchanges disappearing, but getting broken in - tons of them ask so much personal information that you're at a real risk of identity theft or having your bank account drained.

      The others, well, can seem sketchy at times.

    10. Re:Recurring theme? by Immerman · · Score: 4, Interesting

      Indeed. It's about as far from untracable as you can get - you can trace every bitcoin back through every transaction it has ever been involved in to the moment of its creation - try to do *that* with cash. In fact except for the minor fact that you don't have to attach your name to an account it's a surveillance currency buff's wet dream.

      --
      --- Most topics have many sides worth arguing, allow me to take one opposite you.
  3. I don't see a problem.. Follow the... by Mitsoid · · Score: 5, Funny

    Why not just follow the bitcoin trail? Perhaps call the local authorities and ask them for help?

    >.>

    Actually, I do feel sorry... Just had to say it.

  4. Who can you trust now? by bobbied · · Score: 4, Informative

    Another exchange bites the dust, millions lost!

    BitCoin has some *serious* problems, mostly caused by not being officially sanctioned currency that is regulated... But then, that's it's strong point too. But, being a pirate has it's down days. So, if you sleep with dogs, you wake up with fleas (or in this case, w/o your BitCoin. ..

    Oh the humanity... Yawn.

    --
    "File to fit, pound to insert, paint to match" - Aircraft Maintenance 101
    1. Re:Who can you trust now? by mythosaz · · Score: 5, Insightful

      Indeed. Pick your poison.

      If you want a decentralized, unregulated currency, then you don't get a FDIC promise when your bank vanishes overnight.

      I understand why some currency is transitory on these sites, but why are people using online wallets beyond coins in motion (escrow or pending transaction, etc.)?

    2. Re:Who can you trust now? by TWiTfan · · Score: 5, Funny

      It's like my grandpa used to say: "Kid,if you want security, go with U.S. government savings bonds. If you want pussy and meth on the Silk Road, go with Bitcoin." This also explains why my inheritance was mostly in Bitcoins.

      --
      The cow says "Moo." The dog says "Woof." The Timothy says "Thanks, valued customer. We appreciate your input."
    3. Re:Who can you trust now? by freeze128 · · Score: 3

      Dread Grandpa Roberts?

  5. Distributed security HEIST? by ElitistWhiner · · Score: 4, Interesting

    Bitcoin was advertized as the virtual currency NOT stored in one place with NO detrimental reliances upon any ONE server, person or gov't. WTF?

    1. Re:Distributed security HEIST? by Anonymous Coward · · Score: 3, Informative

      You need to use exchanges to trade the bitcoins for real money, and these represent a handful of large points of failure.

  6. Here, random stranger, hold my wallet for me by petteyg359 · · Score: 5, Informative

    What idiot stores their cash in somebody else's wallet with no guarantee of that somebody's legitimacy and no insurance? Maybe these morons will have finally learned their lesson, and will keep their cash in their own wallets in their own pockets.

    1. Re:Here, random stranger, hold my wallet for me by Errol+backfiring · · Score: 3, Insightful

      Everybody who trades at the stock exchange through an intermediary, for example.

      --
      Nae king! Nae laird! Nae yurrupiean pressedent! We willna be fooled again!
  7. Current Market Capitalization by janeuner · · Score: 5, Informative

    For those curious, there are currently 12 million bitcoin in existence, with a net value of about $4.3 billion.

    Source: http://coinmarketcap.com/

    1. Re:Current Market Capitalization by Joining+Yet+Again · · Score: 5, Funny

      For those not curious, here's a video of cats knocking shit over.

  8. Why we need regulations by Anonymous Coward · · Score: 5, Insightful

    It's the 1% who spoil it for the rest of the honest people.

    And actually, it goes deeper than that. A capitlaist system requires trust. Rules and regulations build trust into the system. Without these rules and regulations you don't have capitalism, you have a Wild West financial system that no one would invest a dime in except suckers.

  9. Re:Money for nuthin'... by MarkvW · · Score: 4, Informative

    My dollar isn't just backed by lying bureaucrats. It's backed up by people with guns--big guns. And don't you forget it!

  10. Re:Don't worry guys by Bengie · · Score: 3, Informative

    What do people expect when they hand over money to someone, especially when the money isn't regulated and is being held by an unregulated company.

  11. Re:Don't worry guys by LordLimecat · · Score: 5, Insightful

    Wasnt the whole point that people wanted an unregulated currency with no government involvement?

    Whats that old saying? "Be careful what you wish for."

  12. Non Banking Entity by Demonantis · · Score: 5, Insightful

    This is like all the people that get mad when paypal jerks them around. Don't use a non banking entity as a bank. There is huge history reinforced reasons why the industry is regulated.

  13. Now there's a surprise by H0p313ss · · Score: 3, Insightful

    I'm shocked, *SHOCKED* to find criminal activity happening in this unregulated currency exchange!

    --
    XML is a known as a key material required to create SMD: Software of Mass Destruction
  14. No FDIC doesn't insure banks by mbkennel · · Score: 3, Insightful

    FDIC insures bank's depositors against malefesance by the bank.

    Congress & the Treasury Secretary insures banks, but only if you're part of the in crowd like Goldman Sachs, and JP Morgan, and not Bear Stearns/Lehman Bros or thousands of less cool banks. And you don't even have to pay large premiums upfront---dinners, jobs and lobbying is so much cheaper than premiums.

    The commissioner of the FDIC during the crisis was pretty strenuously against insuring banks and look what it got her.

  15. No by justthinkit · · Score: 3, Informative

    Historically, the FDIC pays insured deposits within a few days after a bank closes, usually the next business day.

    --
    I come here for the love
  16. Normal behavior for Bitcoin exchanges by Animats · · Score: 4, Insightful

    "Take the money and disappear" is normal behavior for Bitcoin exchanges. Sometimes they just disappear, sometimes they get broken into and robbed, and sometimes you're not sure whether the robbery was an inside job.

    The list of failed Bitcoin exchanges is long. Bitcash.cz just closed yesterday. There's an academic paper with a list. 18 of the 40 exchanges on the list had failed. But that was last January. Since then, Bitfloor and Bitme shut down, and Intersango and Mt. Gox stopped paying out customer funds on demand.

    Not one Bitcoin exchange is a bank or a registered broker/dealer in its home jurisdiction. That's part of the problem.

    This is why anarchy sucks. What anarchy looks like is Somalia, not L. Neil Smith fiction.