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One Year Later, We're No Closer To Finding MtGox's Missing Millions
itwbennett writes: When Mt. Gox collapsed on Feb. 28, 2014, with liabilities of some ¥6.5 billion ($63.6 million), it said it was unable to account for some 850,000 bitcoins. Some 200,000 of them turned up in an old-format bitcoin wallet last March, bringing the tally of missing bitcoins to 650,000 (now worth about $180 million). In January, Japan's Yomiuri Shimbun newspaper, citing sources close to a Tokyo police probe of the MtGox collapse, reported that only 7,000 of the coins appear to have been taken by hackers, with the remainder stolen through a series of fraudulent transactions. But there's still no explanation of what happened to them, and no clear record of what happened on the exchange.
An anonymous currency, that allows you to set up an exchange in any country, and without any oversight whatsoever. The whole thing is trust based. Would you leave your cash with any random stranger in some Thai web cafe for safekeeping? Even if you see others do the same, seemingly without worry? Because leaving any significant amount of BTC in an exchange amounts to the same thing.
If construction was anything like programming, an incorrectly fitted lock would bring down the entire building...
Bitcoins are 100% traceable, but wallets are not, and it wouldn't take much shell game playing for enough plausible deniability to be entered into the system, especially if the coins are taken off the board for several years while the currency rises to quad or five digit values per dollar. (BitCoins are too much in use to ever really go down in value for any length of time now that China is in the game.)
Say a wallet has a hundred coins in it, all "dirty". For example, the blockchain traces show they were all in an exchange's possession/wallet, then stolen. Realistically, the coins could be spent by them being put into wallets (perhaps even printed out on paper currency), and distributed/laundered via that method. A few years later, when the wallets are opened and the coins spent, the coins are owned by completely different people, and tracing the gap from when the coins vanished to when they were put back into the ecosystem becomes almost impossible... like trying to trace a dollar bill.
If tainted coins hit an exchange or other service that trades BTC for other goods (even if they just trade BTC for their own currency and back again), unless that exchange has complete records of every transaction, the trail of stolen coins will stop with them, as it takes only one single broken link in the chain to have a trail be impossible to pursue by normal means.
BTC made a lot of money for the early adopters, but it still has not yet lost momentum as a currency, and only will gain in value over time.