Fraud, Not Hackers, Took Most of Mt. Gox's Missing Bitcoins

itwbennett writes Nearly all of the roughly $370 million in bitcoin that disappeared in the February 2014 collapse of Mt. Gox probably vanished due to fraudulent transactions, with only 1 percent taken by yet-to-be-identified hackers, according to a report in Japan's Yomiuri Shimbun newspaper, citing sources close to a Tokyo police probe. The disclosure follows months of investigations by police and others into the tangled mess surrounding the disappearance of the 650,000 bit coins.

Comments

Bitcoin != Coins

[Anonymous Coward]

$370 million is subjective. 650,000 inherently worthless pieces of information went missing. Nobody should have lost any money unless you were dumb enough to buy Bitcoins.

Here's your insightful comment

[frovingslosh]

You can't defraud a digital currency without some form of hacking.

Re:Here's your insightful comment

[Vintermann]

But here's the interesting thing.

Who owns what? According to the hard core of bitcoin fans, it is based on one principle - that the blockchain is the final word on that issue, at least as it concerns bitcoins themselves. If you have the key, the coins are yours.

If you say "those bitcoins aren't yours, they're stolen!" you're implicitly accepting another standard of property - of who owns what - as higher than the blockchain. Then you concede to the messy passions of society to determine who owns what, rather than the mathematical certainties of the block chain.

Bitcoin fans are a bit two-minded on this. On one hand, they demand that money in anonymous accounts belongs to whoever controls the keys, and it's none of your business how they got there. On the other, some do call for blacklisting coins, e.g. the coins FBI seized when Silk Road went under. The technology actually makes that possible, unlike with cash or even conventional digital payments.

I'm all for convicting Karpeles for fraud (and in fact this article is old news to me - despite lots of anonymous accounts trying to pooh-pooh it, investigations of the block chain made a convincing case for fraud in the weeks after MtGox's fall), but I'm also for recognizing the limits of the blockchain, and I'd like BTC fans to realize it can't be a substitute for government, or even government-issued currency.