New Clues About Why Mt. Gox Failed (thedailybeast.com)

An anonymous reader writes: The Daily Beast is investigating internal emails, contracts, and new information provided by a former accounting employee at Mt. Gox for clues about how and why the world's largest bitcoin exchange failed in 2014. They conclude that CEO Mark Karpeles "bought a company already missing tens of thousands of bitcoins" in 2011, leading to an email exchange a few months later where the previous owner suggested ways to make up the $800,000 shortfall. Unfortunately, Karpeles "had signed a non-disclosure agreement that left him unable to discuss the loss," and after a second larger hack, he moved the majority of bitcoins offline into "cold storage," leaving only enough online to complete transactions.

According to the article, former Mt. Gox employees "claim rogue U.S. government agents seized $5 million of Mt. Gox funds in summer 2013 in retaliation for Karpeles's refusal to cooperate with them. This seizure supposedly cut into the firm's operating reserves, which may have been the beginning of the end, at least according to the former Mt. Gox accountant."
While $450 million eventually disappeared, Thursday ZDNet reported that a class-action lawsuit brought against the bitcoin exchange by investors "has been dismissed."

Comments

illegal money laundering... obviously

[Anonymous Coward]

Mt Gox was used for illegal money laundering. This whole topic is like asking, "Why did the mafia get arrested?" ... well, duh.

Re:illegal money laundering... obviously

[Stormy Dragon]

I understand that even paper money doesn't have any actual value beyond what we as society place on it

People may intellectually realize this is the case, but they don't really believe it on an emotional level, which is why they're unable to accept there's no real difference between Bitcoin and the US dollar.

Re:illegal money laundering... obviously

[Anonymous Coward]

I understand that even paper money doesn't have any actual value beyond what we as society place on it

People may intellectually realize this is the case, but they don't really believe it on an emotional level, which is why they're unable to accept there's no real difference between Bitcoin and the US dollar.

That's like saying there's no real difference between my inept artistic endeavors and Da Vinci's Last Supper because they are all images painted on flat surfaces. The US dollar is backed by the world's largest market economy, a powerful government of a sovereign state and a sophisticated financial system capable of processing huge numbers of complex transactions a day (for example annual USD/EUR FX transactions are running at about $1,300 billion (gross) per day). Bitcoin is based on an arbitrary choice to follow one particular genesis block, can't do more than 3 tps due to inherent limitations, and is backed by people who keep writing extremely buggy software in PHP and Javascript and other people who make a living as drug dealers, rip-off merchants and ransomware shits. Pretending these are equivalent is not sensible.

Re:illegal money laundering... obviously

[Troed]

Maybe I'm just stubborn but I honestly don't understand how people can think that it's viable as an actual currency.

You answered your own question:

Also if you look at all the uses for BitCoin I'm sure that the majority of them are not for legal transactions.

Of course, that's only one of the areas where Bitcoin (lowercase 'c') excels. The value of Bitcoin comes from being a decentralized global non-censorable transaction network.

"rogue U.S. government agents"

[Nutria]

Who else thought "NID" from the Stargate universe???

Re:Bitcoin

[mfh]

Bitcoin like anything else is spectrum. Over at one end of the spectrum there are people linked with criminal activity that want privacy in regards to currency because their transactions are illegal and governments would use the transactions themselves as a means of identifying criminal activity.

Over at the other end of the spectrum are economic experts who see it as a liberating exchange medium unencumbered by bureaucracy, unfettered by government interference.

Also it's better than cartels like Paypal.

easy one

[PopeRatzo]

Mt Gox failed because bitcoins are a stupid idea and the people who have been pushing them have a childish view of money and finance.

Not a Mountain

[freeze128]

It's MTGOX, not Mt. Gox.

The website was originally named because it was a trading site for "Magic the Gathering" cards. It's an acronym for "Magic The Gathering Online Exchange". It's not a mountain named Gox.

Re:Not a Mountain

[TechyImmigrant]

It's MTGOX, not Mt. Gox.

The website was originally named because it was a trading site for "Magic the Gathering" cards. It's an acronym for "Magic The Gathering Online Exchange". It's not a mountain named Gox.

This should fixed. It's time to name a mountain Gox.

It failed for the same reason it succeeded.

[Brannon]

It was an anti-establishment un-regulated bank for a rogue currency. That was a huge draw with a certain segment of society.

But it turns out that there are good reasons for bank regulations.

Re:It failed for the same reason it succeeded.

[Anonymous Coward]

A lot of the history of BTC-related efforts read like people unaccustomed to financial regulation finding out - the hard way - why it exists. It turns out it's not all a con by the state.