Slashdot Mirror
Japanese Police Arrest Mount Gox CEO Mark Karpeles
McGruber writes with the news as carried (paywalled) by the Wall Street Journal that Mark Karpeles, who headed bitcoin exchange Mt. Gox, has been arrested by Japanese police: In February 2014, Mount Gox filed for bankruptcy, saying it had lost 750,000 of its customers' bitcoins as well as 100,000 of its own, worth some $500 million at the time. A police spokesman said Mr. Karpelès is suspected of manipulating his own account at the company by making it appear that $1 million was added to it.
The BBC reports the arrest as well, and notes that the coins missing from Mt. Gox represent 7% of all Bitcoins in circulation.
"Mount Gox"? Got to admit, I do tend to think of it like that, but it was (back in the day) an acronym for "Magic the Gathering, Online eXchange". Just MtGox.
Who would leave $116m to be just found?
Given the mass incompetence of how Gox was run, that's the least surprising thing. They had paper wallets scattered around the city that that only Mark knew the password to.
The fishy part has always been that the theft occurred from offline, "cold storage" wallets, and that they rarely/never reconciled the money they had on hand with the debts they owed to customers. The latter is just business 101 for a business that holds other peoples assets. For MtGox that should match 100% as Gox was an exchange, not a bank, and didn't loan out money. Even for a bank the assets have to match the liabilities, and they have to reconcile the books. Gox didn't do that, which is criminally negligent.
A single bit coin can be broken down into parts almost infinity (so you could pay someone 0.00003 bitcoin). It's limited now to something like 8 decimal places, but there's room in the spec to allow even more granularity than that. So while technically every bitcoin in the world could be lost, it's very unlikely.
People who rant about fiat currency tend to miss the point about what money is. Money isn't something of absolute inherent value, it's a representation of productive capacity, that lets people establish relative values of radically different commodities and services, as well as to easily store and transport that value. If I'm a farmer, I don't want to carry a sheaf of wheat around with me to pay for a drink if I get thirsty while I'm in town. Better to use money to represent that, which I can trade to the blacksmith or the carpenter or whomever for what I need, and they can use that same money to come buy wheat from me later.
Gold/silver/etc are certainly traditional forms of money, because they were easily recognizeable in the ancient world as such. The problem with using them as such today is that you can't tailor the supply of money to the amount of production going on. Why do you need to do this? Well, because having it off by too much is bad. Imagine a village where there's 1000 pounds of gold in use as money. Someone comes back from an expedition, having found another 1000 pounds - and causes an immediate 50% inflation because you have 2x the money representing the same amount of production. The reverse is true as well, if production increases by 5% each year, but the amount of gold stays the same - except this time you get deflation, where gold is worth more (so people tend to hoard it to spend later, not now, which in a modern economy is very very bad).
In Japan, getting arrested is pretty much like getting convicted.
Ezekiel 23:20