Hackers Allege Mt. Gox Still Controls "Stolen" Bitcoins

The Verge reports that "Tokyo-based Bitcoin exchange Mt. Gox lost $400 million worth of bitcoins in February. Its management said the amount was stolen after hackers exploited a transaction bug to divert the funds, but some of Mt. Gox's users are not so sure, suggesting instead that the exchange's owners pocketed the cash. Now, facing silence from those owners about the fate of the money and the methods by which 6 percent of all of the Bitcoin in the world could have been stolen, a group of hackers claims it has broken into the bankrupted Bitcoin exchange's network to get answers. ... Forbes reports that the group gained access to the personal blog and Reddit account of Mark Karpeles, Mt. Gox's CEO. The hackers used the platforms to post a message that claimed Karpeles still had access to some of the bitcoins that he'd reported stolen. In support of the claim, they uploaded a series of files that included a spreadsheet of more than a million trades, Karpeles' home addresses, and a screenshot purportedly confirming the hackers' access to the data." (The Forbes article on which the Verge report is based.)

Comments

Stills seems like it has to be an inside job

[DarkOx]

I tend to think it has to be an inside job, that is being run by the folks pretty high up. Any kind of really really basic accounting and inventory control should have uncovered more coins going out than the transaction register indicates. This transaction malleability issue supposedly went on for months.

Even a badly run business should have detected a problem like the time frame of weeks, whenever their next month end comes up. It would have been impossible to balance the books, unless someone was simply not doing them or cooking them.

Re:Stills seems like it has to be an inside job

[delt0r]

Well i was on contract to fix bugs in a teleco accounting system where they could only find the missing cash every 3 months when a manual audit was done. Transaction volumes where a little over 1 Billion per year however, and it was only a million or so missing every 3 months.

Re:Stills seems like it has to be an inside job

[Splab]

Why high up? Most articles about Mt. Gox talks about lax security and bag change management.

They had half a billion dollars worth of bitcoins, a "currency" which is extremely hard to track and ridiculously easy to steal if you have the keys to the city. Stealing half a billion dollars (without being a bank) requires a truck and some heavy lifting - a developer stealing the wallets and nuking the database takes only a few seconds and very little lifting.

I find it harder to believe it took so long for someone to steal it...

Re:Stills seems like it has to be an inside job

[ras]

Consider these Mt. Gox loses:

• - June 2011: seller's administrator account was hacked by an unknown process. The priveleges were then abused to generate humungous quantities of BTC. None of the BTC, however, was backed by Mt. Gox. The attackers sold the BTC generated, driving Mt. Gox BTC prices down to cents. They then purchased the cheap BTC with their own accounts and withdrew the money. ... Many customers claim they have lost money from this reversion, but Mt. Gox claims it has reimbursed all customers fully for this theft. After the incident, Mt. Gox shut down for several days.
• - June 2011: Users with weak passwords on MyBitcoin who used the same password on Mt. Gox were in for a surprise after the June 2011 Mt. Gox Incident allowed weakly-salted hashes of all Mt. Gox user passwords to be leaked. These passwords were then hacked on MyBitcoin and a significant amount of money lost.
• - October 2011: Mt. Gox accidentally destroyed 2609.36304319 bitcoins.
• - July 2012: A hacker infiltrated the Mt. Gox account used by Bitcoin Syndicate, sold off the USD owned, and withdrew all balances.
• - July 2012: On July 13, 2012, a thief compromised the Bitcoinica Mt. Gox account. The thief made off with around 30% of Bitcoinica's bitcoin assets.

But for any programmer, none of this is a surprise given he hacked up an ssh server in PHP, then deployed it on a production server.

Re:Stills seems like it has to be an inside job

[rmdingler]

Interesting. Missing 1/1000th of the annual billion+ transactions every quarter can be found by a manual audit , but not detected by programmed oversight?

Wait, it's those damn programmers, huh?

Re:Stills seems like it has to be an inside job

[JoeMerchant]

I think what people miss is that they didn't have a half billion USD worth of currency when they set things up. When they set things up, BTC was trading for less than 1% of today's values, and (just speculating here) a couple of years back they probably had a small fraction of the BTC that they have today (had a few months ago, at least...). So, the half billion USD peak might have only been a hundred thousand or so when the organization started to "get serious."

When your organization's total assets are less than a year's salary of a good software engineer, odds are, you don't have a good software engineer on staff full time to make sure things like change management are happening properly. Ditto for accounting and audits.

Should they have hired up proper staff when assets started to resemble Scrooge McDuck's vault? Yep, they sure should have. Think about how long it takes to hire good people when you're looking for them. Now think about how long it takes management to start looking for good people, even when they have a clearly demonstrated need, but no immediate crisis.

Not that I trust a damn thing written about fund managers on prospectuses, but this is why people should be looking for years of experience in relevant fields in the team that manages an investment. Then, when the fund goes bust and it turns out that the prospectus was a pack of lies, some lawyers can make a little money suing the bastards until they only have their offshore accounts left to live on.

Re:Stills seems like it has to be an inside job

[delt0r]

Financial system i have worked have never used floats. Its integers. Either just cents, or 10th of a cent. Or 2 integers for dollars and cents. There are rounding rules for this sort of thing.

Re:Stills seems like it has to be an inside job

[Ralph Wiggam]

There's no other reasonable explanation.

So there's absolutely no chance that people who created a web site to trade Magic The Gathering cards, then hastily modified it to trade bitcoins, could possible get in over their heads technically and financially?

Anonymous cryptocurrency, who to trust?

[Rick in China]

Given how easily it would be to get away with the theft of anonymous cryptocurrency, I am surprised there aren't far more 'hacks' where exchanges rob all they can from their customers then close up shop. I know it has happened in China on much smaller scales, and I'm sure it will happen many more times, the question is who can you possibly trust with something that can be so easily disappeared.

Re:Anonymous cryptocurrency, who to trust?

[Anonymous Coward]

who can you possibly trust with something that can be so easily disappeared.

If only there was some kind of existing business that had heavy government oversight that could take care of that issue.

Re:Anonymous cryptocurrency, who to trust?

[Z34107]

who can you possibly trust with something that can be so easily disappeared

No one, which is why you don't. There's no reason to keep your bitcoins in an "online wallet," or maintain a balance in an exchange, just like there's no reason to keep your life savings in PayPal.

Re:Anonymous cryptocurrency, who to trust?

[Anonymous Coward]

Right, instead you should keep it in an offline wallet! Just like how it's smart to keep your life's savings in an actual, physical wallet!
Oh wait, no, that's fucking retarded.

This is (one of) the (many) problem(s) with bitcoin: no one can actually come up with a sane answer of how you are supposed to store it safely. Trust it to an exchange and you're basically no better off than trusting real money to a bank -- worse off, in fact, because the lack of regulations means that if the exchange takes your money and runs you're SOL, while if a bank takes your money and runs it will be reimbursed (up to a limit) courtesy of the FDIC. Keep it in an offline wallet and you can be sure that no banker can abscond with it, but now your life's savings are tied to a single, stealable object.

Re:Anonymous cryptocurrency, who to trust?

[gox]

the question is who can you possibly trust with something that can be so easily disappeared.

The answer is to never assign trust in a single point. That's the whole reason Bitcoin was designed for, and these thefts really show how backwards we are with regards to the technology we have.

Surprisingly few people actually know this, but Bitcoin addresses are actually little programs that calculate the required criteria to move money out of the "address". It's purposefully Turing incomplete. The simplest defense against malevolent or incompetent parties is to require multiple signatory entities. For instance, one could be the deposit institution itself, another party for dispute resolution (e.g. a lawyer), and finally the customer. You can require only two of three signatures to move the amount so that the customer can extract the money with the help of the arbiter even if the deposit institution disappears.

Other, more sophisticated solutions are also possible, and some of the businesses themselves can even become transparently automated. However, it seems like it won't be that easy to get there, even though the crucial technology is already available.

Re:Anonymous cryptocurrency, who to trust?

[Gunboat_Diplomat]

Nearly 150 Breeds Of Bitcoin-Stealing Malware In The Wild, Researchers Say
.

From the article:

"To steal the coins of users who encrypt their private keys with passwords, many of the Bitcoin stealing programs also included keyloggers designed to eavesdrop on users’ typing. Even more tricky are malware types that wait for users to copy a Bitcoin address they want to send bitcoins to into their clipboard. When the user tries to paste the address, the malware replaces it with a different string, irreversibly sending the currency to the malware operator’s wallet. That last method never sends data to a remote server, so it can be much harder to detect, SecureWorks’ researchers say. In fact, they tested a range of antivirus scanners on their malware samples and found that roughly 50% went unnoticed."

Re:Anonymous cryptocurrency, who to trust?

[MartinSchou]

No banks? How do you plan on borrowing money to buy things you can't afford outright, like a new car or a house?

Beware: Wallet-stealing virus in the dump

[psymastr]

Reddit users have verified via decompilation that the dump file includes a wallet-stealing executable. The executable attempts to send the wallet to a hard-coded IP address, whose ISP has been notified of this.

Re:Beware: Wallet-stealing virus in the dump

[psymastr]

Actually it was Bulgaria, and they responded that they will take care of this.

The article is full of errors

[pantaril]

The reporter probably doesn't understand what's going on at all.

1) the leaked data contains not only the mt.gox DB dump (which seems to be legit) but also the TibanneBackOffice.exe binary which is actualy malware which steals bitcoin wallets. So i wouldn't trust the hackers at all, they are scammers. See http://www.reddit.com/r/Bitcoi... for more details.
2) The article/the hackers claim that the mt.gox database dump shows that mt.gox should be in control of over 900k bitcoins and that it is an evidence that mt.gox is lying. Well it is evidence that the article/hackers don't understand anything. From the start, mt.gox is saying that because of a transaction malevability bug, their ballances in DB and their balances on their actual accounts were ouf of sync. This is the reason they didn't notice sooner. Their DB was showing everything was ok but in reality, their money was silently siphoned out of their accounts.
3) Karpeles (mt.gox owner) is probably staing silent because his lawayers told him so. Nothing unusual here.

Re:An executable? In a dump?

[wonkey_monkey]

And I thought people that ran kitten.scr.exe were idiots.

What a bunch of morons. I checked, Windows says I only have kitten.scr so I'm safe.

Sitting on a stack of traceable coins

[Alarash]

There's something I don't understand. If they 'stole' the coins, they can't really trade them can they? Anyone I mean. As I understand every single transaction is tracked, so you can't really spend them without people knowing so right? Ok so you can hide your identity and whatnot, but wouldn't people know the instant these BTC are back on the market?

Re:Sitting on a stack of traceable coins

[codebonobo]

Stolen coins can all be tracked but are still usable. There are numerous ways to make it harder to track with coinjoin, mixers, and trading back and forth between different crypto-blockchains that a thief can use to hide their assets however.

Re:This is why we can't have nice tihngs...

[egarland]

People who claim modern currency is baseless don't understand economics. Modern currency is backed by *everything*. Gold, Real Estate, Cars, Businesses. Everything that is used for collateral against a loan becomes backing for our currency. Crypto-currency is based on scarcity like gold was, and thus makes a terrible general purpose currency because it's vulnerable to manipulations, and rigidity that make it easy for bankers and insiders rob everyone. The modern form of debt backed currency is the most flexible and least vulnerable to manipulation there has ever been. Our advanced modern currency has weathered the pressures of the current economic stresses extremely well, and dramatically lessened the impact of the current problems with our economy. If you want to look at what things where like with a scarcity backed currency, look at the economics of the US pre 1913. It's full of horror stories like the panic of 1893 and 1873, and even some events where bankers conspired to not give out loans to anyone to buy up houses cheap and re-sell them for a profit once they all agreed to give out mortgages again.

Re:This is why we can't have nice tihngs...

[Ralph Wiggam]

Your basic grasp of economics and history has no place here.

Re:This is why we can't have nice tihngs...

[durrr]

You've misunderstood what currency backing means.

A something-backed currency means that there have to be a _fixed_ amount of physical entity somewhere in the possession of whoever decides to give out the currency. This is not the case with the current fiat. Sure it can be exchanged for all those things you mentioned but it's backed by none of them, some central bankers could agree to create ex nihilo enough money to give a billion USD to every bank account in the world. If you then reason that a dollar is backed by cars then either there would be a huge surplus of cars somewhere to allow this to happen, or someone managed to multiply the current global carpool a millionfold overnight.