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Mt. Gox Knew It Was Selling Phantom Bitcoin 2 Weeks Before Collapse
An anonymous reader writes "Mt. Gox CEO Mark Karpeles wrote in a sworn declaration in the company's U.S. bankruptcy filing he suspected hundreds of thousands of bitcoins were missing on Feb. 7, more than two weeks before it finally halted trading. That means Mt. Gox allowed its customers to continue trading, knowing that its bitcoin stash was wiped out and collecting as much as US$900,000 in trading fees. Since Mt. Gox said it was also missing $27.3 million in cash from customer deposits, it raises the possibility that customers — despite seeing a cash balance displayed in their account — might have actually been buying bitcoins that did not exist, with cash that was already long gone."
I'm all for what bitcoin is trying to achieve. But this is just a news story about an exchange which didn't know what it was doing, trading in a currency that hasn't been fully proven, operating in an unknown capacity from somewhere in Japan, and without any oversight at all. That's like millions of people asking my buddy Joe who lives in a trailer to hang onto their money for them. Oh no, bad decisions were made?
I do not see why there are still people out there who keep saying Bitcoin is a good investment. We keep seeing these exchanges fold up and run off with all this money. I know they claimed they were hacked, but how do we know for sure. To me the whole Bitcoin thing is just a way for a few to get rich by ripping off so many others. Also no one should be surprised that they were sold phantom Bitcoins. You have no way of knowing what you actually have on a site like that since you can’t directly access the wallet. It seems like common sense to me, but I guess I will never understand this kind of thing.
It's official. The name is now changed to MtGotchya.
-- You are in a maze of little, twisty passages, all different... --
The only people who make money in a pyramid scheme are the people at the very top. Everyone else is a sucker.
SJW's don't eliminate discrimination. They just expropriate it for themselves.
I'm thinking of a word for a kind of system where, I don't know, someone makes rules for how large chunks of assets are managed, traded, stored. This word would mean that some PEOPLE, some kind of official-sounding types of PEOPLE, would "check up" on these places, these places that handle and store and manage other people's money, or assets, stuff. They would be checking up to make sure that the people who run those places, those people, wouldn't be, knowingly or unknowingly, doing things with other people's money that they shouldn't be doing. Maybe there could be a kind of system, say, where those people doing those things, are encouraged or made to do some things, to prove, that they have the money and things that they are supposed to have, and doing the things, those things that they are supposed to do, and not doing those things that they are not supposed to be doing, to those other people's money, and assets and stuff. And that they're honest, about what they say that they're doing, and that they're not doing. Who would be doing all that checking, and what would that process be, and who would be subject to it. If only there were one simple word for all of that.
Gold is not hard currency. That term really should really only apply to diamonds.
upon the advice of my lawyer, i have no sig at this time
Isn't the bitcoin protocol expected to prevent exactly this? Assuming that the cryptographic part wasn't broken, the existence of a 6-block chain telling you the coins are there means they *are* there. Something tells me that a lot of people blindly trusted some random guy on the internet with their money instead of simply validating the fckn block chain, which would have told them immediately that they were screwed over.
Neoliberals? I'm under the impression that Libertarians with the minds of teenagers are the ones so in love with Bitcoin, and opposed to regulation that would normally keep their money safe.
I do not see why there are still people out there who keep saying Bitcoin is a good investment
For those at the top of the pyramid scheme it probably is. For everyone else? Yeah, not so much. Bitcoin has all the hallmarks of a pump and dump scheme. Thinly traded asset of dubious future value? Check. Marketing campaign to recruit investors? Check. Early large purchases at discounted rate? Check. Absurdly fast rise in "value"? Check. Early investors selling out or disappearing and leaving the new investors holding the bag? Check.
Unregulated bitcoin exchanges are basically pyramid schemes waiting to happen. The bitcoin currency itself looks shockingly like a pump and dump scheme and should be treated as radioactive (i.e. very carefully) until proven otherwise.
You aren't looking back far enough. The "with-it" trendy people as you call them, mined bitcoins or bought them when they were worth ~$1 or less. If the world comes crashing down and they end up back there, they lost nothing. I believe you are thinking of the people that only cared about bitcoin when it began to have some exchangeable value, where bitcoin was an investment, or a scheme to get rich. These will be the people who suffer. These are the ones who "fell for the scam"
"When life gives you lemons, don't make lemonade. Make life take the lemons back!" -- Cave Johnson
That all depends on how one prefers to be robbed. The transparent, libertarian way is to have your money stolen in front of you. The opaque, governmental way is to have it stolen in 3% to 5% increments every year via government-mandated inflation.
If you hold your own Bitcoins in a local wallet, then yes, a handful of confirmations adequately proves you really do have those coins.
As soon as you entrust them to someone else to store in a pooled account, bam, confirmability lost.
A key philosophy behind the BTC protocol assumes direct person-to-person transactions. If you adhere to that, you don't get screwed by a failed exchange; for that matter, you don't even care about the existence of an exchange... Except insofar as they help define the "worth" of a Bitcoin as a medium of trade. Though, with the likes of Overstock accepting BTC now, the marketplace itself might soon serve that function without needing an external point of reference.
The only reason people were into this was to either trade in illegal goods and services or be cutting edge with something that only really served to facilitate illegal activity.
Fuck you very much, sir.
I, and the vast majority of Bitcoin users, engage in entirely legitimate commerce with BTC as the medium of exchange. Heck, I even declared my BTC gains on my taxes last year, fer chrissakes.
Now, when I want to score a quarter of weed - You ever actually try to buy anything with BTC, or just mindlessly parroting the FUD about Silk Road? My dealer takes USD only, thanks.
Overstock doesn't hold BTC, they convert it via CoinBase. Coinbase sets Overstock's BTC prices for them by using the current exchange rate. When you go to checkout with BTC you get a quote for the price that is only good short amount of time, if you don't pay the invoice within that window you have to start over and get a new price quote.
Except banks have multiple layers of safety nets to cover depositors and investors if things go bad.
Climbing a mountain with and without a rope are identical most of the time, but the difference is very important under certain conditions.
You have anarchy wrong. Anarchists are not against government regulation. They are against power. If a small amount of government regulation results in a large reduction in corporate power, some anarchists (such as this one) would support that.
sorry, you are only allowed to do this sort of thing with impunity if you work on wallstreet.
Sleep your way to a whiter smile...date a dentist!
Well, when this happens to an actual bank, you have $5k up until the day the bank stops paying withdrawals, at which point you have some amount less than $5k. How much less is determined by value of the assets that remain on the books, which is usually much higher than $0. When an FDIC-insured bank fails, usually depositors eventually recover some amount over 90% of their uninsured assets as the government "winds down" the bank by selling off the loans at market value and distributing the proceeds.
Without regulation? I suppose how much in the way of assets they have left to portion out to depositors just depends on how long their cash or credit reserves last... All Mt. Gox had was what a banker would call "reserves", and they ran those down to $0 before shutting the doors. In that case, you have $5k up until the point they couldn't pay out withdrawals, at which point it instantly went from $5k to $0.
No, bitcoins have been stolen. They're not recognised as currency or really as property in Tokyo, so essentially nothing was stolen. Perhaps with this revelation there might be a case for fraud, but not as likely for theft.
That all depends on how one prefers to be robbed. The transparent, libertarian way is to have your money stolen in front of you. The opaque, governmental way is to have it stolen in 3% to 5% increments every year via government-mandated inflation.
You are being far too kind sir, the CPI was juked in the 80s by removing "fuel" and "Food". 2 variables that everyone somewhat depends upon. Most are losing 5-13% a year in the most stable Fiat worldwide; other national currencies are much worse.
This is not a bitcoin failure. Nothing about bitcoin failed here.
This is MtGox, a sorta-kinda but not really bank like entity (relax, trust us) that failed in a big way. Either it really got hacked and lost the bitcoin, or it was a giant fraud an it stole the bitcoin itself.
Yep. It's a payment network. It doesn't need to satisfy the requirements for real money, it just needs to satisfy the requirements for making payments.
Though, with the likes of Overstock accepting BTC now, the marketplace itself might soon serve that function without needing an external point of reference.
Why is this lie perpetually getting repeated? Hell, some moron even modded it up. Overstock (and Tigerdirect, etc) do not accept bitcoins as payment.
Once again for those of you too stupid to read carefully - No major retailer accepts bitcoins as tender!. Some of them allow you to pay via an exchange such as coinbase, but note that even though the customer is parting with bitcoins, the seller is only ever receiving dollars (AKA real currency).
I'm a minority race. Save your vitriol for white people.