AIPAC/NSA: Bitcoin Mt-Gox Steals 1/2 Billion USD of Client Money - Largest BITCOIN EXCHANGE on Earth - Secret Document Tells Insider Plan's to Loot Clients
Bitcoin’s Mt. Gox Goes Offline, Loses $409M Dollars — Recovery Steps and Taking Your Tax Losses
Mt. Gox’s recent troubles are circulating like wildfire. Its repercussions are being felt throughout the world. Mt. Gox was the most public and well-known brand that represented Bitcoin’s exchange market. The company’s shutdown is rumored to be caused by a “hack” or “security breach” that resulted in a loss up to 744,000 BTC or $409,200,000 Dollars. (Based on the approximate value just hours ago from Coindesk.com) This is truly an unfortunate event that has caused the international community to shake its trust in Bitcoin as evidenced by the massive price drop. This is par for the course, when a pillar in the community falls in such a funeral pyre. The best parallel would be the Bear Stearns’ failure during the 2008 global financial crisis. Hopefully, Bitcoin won’t follow in the financial system’s footsteps post-Bear Stearns.
This Not The First Time
http://www.scribd.com/doc/209050732/MtGox-Situation-Crisis-Strategy-Draft
MT-GOX Situation CRITICAL STRATEGY SELF DESTRUCT – TOP SECRET
Following MtGox’s shutdown today, an anonymous document has surfaced detailing the company’s woes and future plans. Posted by bitcoin entrepreneur Ryan Selkis on his Tumblr blog “The Two-Bit Idiot”, the leaked document titled “MtGox Situation: Crisis Strategy Draft” is attributed to MtGox insiders about the company’s financial position and future. In a follow up post, Selkis added that sources close to the company confirmed to him figures in the document.
According to the document, 744,408 are missing due to transaction malleability theft that had gone unnoticed for several years. The paper than explains that based on the losses, it was proposed to:
1 – Immediately reduce liabilities as much as possible with partners
2 – Switch off the MtGox exchange temporarily and announce restructuring to the name ‘Gox’, and posting a letter of current CEO Mark Karpeles stepping down
3 – Push new branding
4 – Set up a new competent team and redesign the service and codebase
The document then provides a summary of current assets and liabilities as well as a timeline of implementing their strategy, with the first date today and culminating in the relaunch as just ‘Gox’ in April or later this year.
Included in the document is a breakdown of Assets and Liabilities showing liabilities of over $80. However, a projected business plan of what a rebranded ‘Gox’ would achieve was also posted showing projected income of $39 million by 2016 if the restructuring takes place.
Hoax?
According to Selkis, the document is authentic. However, even if it were to have been created by members of the MtGox executive team that are aiming to receive new funding to keep the operation going, the details may not be authentic and could be the continued cover up of insider theft.
Three items that appear very suspicious to our eyes:
Community connection: In describing their insolvency, the document reads “The reality is that MtGox can go bankrupt at any moment and certainly deserves to as a company”. It then goes on to explain that the damage to bitcoins in the public eye “could put it back 5-10 years and cause governments to react swiftly and harshly.” The paper continues that “We believe in the value of bitcoin…we care about our customers… and other bitcoin related business.” As such, they conclude that this isn’t as much about saving MtGox but of stabilizing the entire community; thus “we believe that the benefits of keeping MtGox stable and running outweigh the risks”.
This description borders on apologetic and arrogance as the writer is aiming to keep their company alive by connecting themselves to the entire community. As such, it can be construed as a pseudo ‘black mailing’ of the entire bitcoin community, that it is best to keep MtGox/Gox. The connection to the overall community is similar to when MtGox first announced the transaction malleability problems and stated that they were doing a service to all firms by bringing it to the attention of other exchanges (it can be said that this was a disservice since many believe that the operators of Silk Road 2 used this excuse to steal customer funds).
Cold Storage Theft??: The item we are having the hardest time understanding is the statement that “The cold storage has been wiped out due to a leak in the hot wallet”. This statement seems dubious as it implies a connection between cold and hot wallets that would allow an automatic refill of the hot wallet from cold storage when the hot wallet was empty. The entire rationale behind using cold storage is to move spare bitcoins offline (which are typically the majority of customer holdings). Even if kept online, cold storage would be protected with increased forms of encryption to limit any automatic transactions. As such, the above statement infers that MtGox a) didn’t monitor balances of its cold storage and b) allowed for automatic transactions to be available. In terms of b, it is possible that this was the case, as they may have wanted to ensure minimum delays in processing bitcoin withdrawals. However, such an automatic procedure contrasts from policies at other major firms. For example, in an interview with Kevin Rose, Coinbase CEO Tim Armstrong explained how his company used cold storage to increase security measures and manual requirements necessary for implementing transactions. But, even were there to be an automatic connection between the wallets, it is difficult to understand how such theft was taking place with no accounting of balances for over two years.
Karpeles blame: Last, the blame on CEO Mark Karpeles seems limited as the proposed letter of his resignation reads “Admitting his errors and expressing desire to fix the situation by stepping back as CEO of MtGox.” Again, the language is focused on him ‘doing everyone a favor’ rather than being blamed for failure of allowing massive theft to occur.
Therefore, while the document may be authentic it has aspects of a massive ‘cover-up’ job. As far as the public knows, there has been no proof that insiders haven’t stolen the coins. On the contrary, signs of the case point towards misappropriation and a Ponzi like scheme. This includes:
- Withholding fiat currency withdrawals
- Expanding to bitcoin withdrawal delays
- Blaming bitcoin delays on third parties; initially due to investigations of Bitinstant and then the transaction malleability
- Following up with updates of more delays
- No updates on financials or direct CEO statements to the public, other than through an interview to Forbes
- Announcing they were moving their headquarters
- Closing website and erasing Twitter feeds, followed by ‘leaked’ document
On their own, each point could be traced to rationale explanations, however together they follow the typical plans seen numerous times by financial companies involved with fraud.
Bitcoin came from NSA, and most of early development came from Israel scientists, and the mining was +80% given to UKRAINE in exchange for them giving to Israel, now that BITCOIN is imploding the NSA/CIA/MOSSAD has to give UKRAINE real cash, instead of the bitcoin franchise.
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Whistler Blowers, Insiders
Bitcoin is NSA
Bitcoin Mining franchise +80% is controlled by UKRAINE.
Israel used Bitcoin to get Ukraine to Buy Oil from them, rather than Gazprom.
Now Bitcoin is worthless,
Now NSA/CIA/MOSSAD must force the Federal Reserve to give UKRAINE $35 Billion in secret money to keep the country from falling into civil war.
Rumors about the possible collapse of leading Bitcoin exchange Mt. Gox are sending shock waves through the community that has embraced the virtual currency.
Amid radio silence from the company, users are attempting to sort through conflicting signals that the company has shut down or that it is being acquired and possible relaunched. There was a debate over the authenticity of a document circulating that appears to be an internal Mt. Gox memo detailing how the company may have lost 744,000 Bitcoins in theft over several years.
A joint statement from several Bitcoin companies condemned Mt. Gox’s handling of its situation:
“This tragic violation of the trust of users of Mt. Gox was the result of one company’s actions and does not reflect the resilience or value of bitcoin and the digital currency industry. There are hundreds of trustworthy and responsible companies involved in bitcoin. These companies will continue to build the future of money by making bitcoin more secure and easy to use for consumers and merchants. As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today.”
Still, the uncertainty sent the value of Bitcoins tumbling and raised questions about whether the Mt. Gox issue could bring down the entire Bitcoin economy.
Just last week, Japan-based Mt. Gox apologized for a 10-day disruption that has prevented customers from exchanging the virtual currency on its platform and said trading should resume again “soon.”
The problem stemmed from what appears to be a broader issue with the Bitcoin system, which is a distributed set of protocols that are not controlled or maintained by any single entity.
In addition to Mt. Gox, the Bitstamp and BTC-E exchanges were also hit with problems, though the other two have since resumed operations.
Mt. Gox stopped letting customers withdraw Bitcoins on Feb. 7, saying there was some kind of glitch in the Bitcoin system.
The company said it had developed a workaround that it was in the process of implementing. However, a week went by and users noticed that the site seemed to be disabled. The main homepage is blank. The company said the fix would take some time, and that it would resume trading only gradually.
On Monday, a “Crisis Draft Strategy” document was obtained by somebody and posted online, purporting to be from Mt. Gox. The document, which some claim is a fake, raised further alarms because it seemed to indicate the issue at Mt. Gox went beyond some glitches:
“At this point 744,408 BTC are missing due to malleability-related theft which went unnoticed for several years,” reads one slide in the presentation.
The document adds:
“The reality is that MtGox can go bankrupt at any moment, and certainly deserves to as a company. However, with Bitcoin/crypto just recently gaining acceptance in the public eye, the likely damage in public perception to this class of technology could put it back 5-10 years, and cause governments to react swiftly and harshly. At the risk of appearing hyperbolic, this could be the end of Bitcoin, at least for most of the public.”
The document then goes on to lay out the case for trying to save Mt. Gox or just shut it down.
There was a report Monday night that indicated that the company may be in the process of selling itself to a new entity and rebranding itself as Gox.com and preparing a strategy to relaunch under the new name.
The Bitcoins apparently lost by Mt. Gox account for about 6% of all Bitcoins in circulation. If they are lost, it’s unclear who may control them.
The uncertainty surrounding Mt. Gox comes just as a New York firm, SecondMarket, was announcing plans to create a new exchange with some major banks as possible partners.
Just recently, Silicon Valley venture capitalist Marc Andreessen wrote about his belief that Bitcoin was one of the Internet’s most significant developments.
Until last week, the virtual currency seemed to be riding a growing wave of public acceptance.
Now that seems to be in jeopardy.
Ryan Galt, a Bicoin blogger, wrote a post expressing his fear that this could be a fatal blow.
“This is catastrophic, and I am sorry to share this,” he wrote. “I do believe that this is one of the existential threats to bitcoin that many have feared and have personally sold all of my bitcoin holdings through Coinbase.”
BITCOIN is FRAUD, pure and simple.
To date over $10 BILLION USA dollars has been stolen from people stupid enough to BUY bitcoin.
When will it end? When they run out of suckers to fleece, … when is that? When the suckers have no more money.
Mt. Gox is a Bitcoin exchange based in Tokyo, Japan. Mt. Gox was established in 2009 as a trading card exchange,[1] but rebranded itself in 2010 as a Bitcoin business and was, for a time, the largest-volume Bitcoin exchange.[1]
On 23 February 2014, Mark Karpeles, the CEO of Mt. Gox, resigned from the board of the Bitcoin Foundation.[2] The same day, all posts on their Twitter account were removed.[3]
On 24 February 2014, Mt. Gox suspended all trading, and hours later its website went offline, returning a blank page.[4][5][6] A leaked internal document of unconfirmed authenticity, published by a blogger the same day and widely circulated, said that the company was insolvent, after losing 744,408 bitcoins in a theft which went undetected for years.[4][5] Six other major bitcoin exchanges released a joint statement distancing themselves from Mt. Gox, shortly before Mt. Gox’s website went offline.[7][8]
History
The Mt. Gox website was originally founded by Jed McCaleb as an online exchange for buying and selling Magic: The Gathering cards, a popular trading card game.[9] Its name was an acronym of Magic: The Gathering Online eXchange.[9] McCaleb changed the site to a Bitcoin exchange, and as it began to take off in 2011, he sold it to Mark Karpeles.[9] Under Karpeles’ ownership, the site grew to handle 70% of the world’s bitcoin trades by April 2013.[9]
Example Bitcoin price history in USD on the Mt. Gox exchange
Trading incidents
On 19 June 2011, a security breach of the Mt. Gox bitcoin exchange caused the nominal price of a bitcoin to fraudulently drop to one cent on the Mt. Gox exchange, after a hacker allegedly used credentials from a Mt. Gox auditor’s compromised computer illegally to transfer a large number of bitcoins to himself. He used the exchange’s software to sell them all nominally, creating a massive “ask” order at any price. Within minutes the price corrected to its correct user-traded value.[10][11][12][13][14][15] Accounts with the equivalent of more than USD 8,750,000 were affected.[12]
On 22 February 2013, following an introduction of new anti-money laundering requirements by Dwolla, some Dwolla accounts became temporarily restricted. As a result, transactions from Mt. Gox to those accounts were cancelled by Dwolla. The funds never made it back to Mt. Gox accounts. Mt. Gox help desk issued the following comment: “Please be advised that you are actually not allowed to cancel any withdrawals received from Mt. Gox as we have never had this case before and we are working with Dwolla to locate your returned funds.” The funds were finally returned on May 3, more than 3 months later, with a note “Please be advised never to cancel any Dwolla withdrawals from us again”.
In March 2013, the bitcoin transaction log or “blockchain” temporarily forked into two independent logs with differing rules on how transactions could be accepted. The Mt. Gox bitcoin exchange briefly halted bitcoin deposits. Bitcoin prices briefly dipped by 23% to $37 as the event occurred[16][17] before recovering to their previous level in the following hours, a price of approximately $48.[18]
Suspension of trading
Mt. Gox suspended trading on 11 April 2013 until 12 April 2013 2am UTC for a “market cooldown”.[19] The value of a single bitcoin fell to a low of $55.59 after the resumption of trading before stabilizing above $100.
Mt. Gox suspended withdrawals in US dollars on June 20, 2013.[20] On July 4, 2013, Mt. Gox announced that it had “fully resumed” withdrawals, but as of September 5, 2013, few US dollar withdrawals had been successfully completed.[21][22][23]
On August 5, 2013, Mt. Gox announced that they have incurred “significant losses” due to crediting deposits which had not fully cleared. Mt. Gox announced that new deposits would no longer be credited until the funds transfer to Mt. Gox is fully completed.[24]
Legal issues
On 2 May 2013 CoinLab filed a $75 million lawsuit against Mt. Gox alleging a breach of contract.[25] The companies announced a partnership in February 2013 under which CoinLab would handle all of Mt. Gox’s North American services.[25] CoinLab’s lawsuit contends that Mt. Gox failed to allow them to move existing U.S. and Canadian customers from Mt. Gox to CoinLab.[25]
On 15 May 2013 the US Department of Homeland Security (DHS) issued a warrant to seize money from Mt. Gox’s US subsidiary’s account with payment processor Dwolla.[26] The warrant suggests the US Immigration and Customs Enforcement (ICE), an investigative branch of the DHS, felt the subsidiary, which should have been licensed by the US Financial Crimes Enforcement Network (FinCEN), was operating as an unregistered money transmitter in the United States.[26][27]
On 29 June 2013, Mt. Gox received its money services business (MSB) license from FinCEN.[27]
Withdrawals delayed or refused
Wired Magazine reported in November 2013 that customers were experiencing delays of weeks to months in withdrawing funds from their accounts.[9] The article said that the company had “effectively been frozen out of the U.S. banking system because of its regulatory problems”. Customer complaints about long delays were mounting as of February 2014, with more than 3300 posts in a thread about the topic on the Bitcoin Talk online forum.[28]
On 7 February 2014, all Bitcoin withdrawals were halted by Mt. Gox.[29] The company said it was pausing withdrawal requests “to obtain a clear technical view of the currency processes”.[29] The company issued a press release on February 10, 2014 stating that the issue was due to transaction malleability: “A bug in the bitcoin software makes it possible for someone to use the Bitcoin network to alter transaction details to make it seem like a sending of bitcoins to a bitcoin wallet did not occur when in fact it did occur. Since the transaction appears as if it has not proceeded correctly, the bitcoins may be resent. MtGox is working with the Bitcoin core development team and others to mitigate this issue.”[30]
On 17 February 2014, with all Mt. Gox withdrawals still halted and competing exchanges back in full operation, the company published another press release indicating the steps they claim they are taking to address security issues.[31] In an email interview with the Wall Street Journal, CEO Mark Karpeles refused to comment on increasing concerns among customers about the financial status of the exchange, did not give a definite date on which withdrawals would be resumed, and wrote that the exchange would impose “new daily and monthly limits” on withdrawals if and when they were resumed.[32] A poll of 3000 Mt. Gox customers by CoinDesk indicated that 68% of customers were still awaiting funds from Mt. Gox. The median waiting time was between one to three months. 21% of poll respondents had been waiting for three months or more.[33]
On 20 February 2014, with all withdrawals still halted, Mt. Gox issued yet another statement, giving no date for the resumption of withdrawals.[34] A protest by two Bitcoin enthusiasts outside the building that houses the Mt. Gox headquarters in Tokyo continued. Citing “security concerns”, Mt. Gox announced they had moved their offices to a different location in Shibuya. Bitcoin prices quoted by Mt. Gox dropped below 20% of the prices on other exchanges, reflecting the market’s estimate of the unlikelihood of Mt. Gox paying their customers.[35][36]
On 25 February 2014, MtGox reported on its website that a “decision was taken to close all transactions for the time being”, citing “recent news reports and the potential repercussions on MtGox’s operations”. The chief executive, Mark Karpeles told Reuters that MtGox was “at a turning point”.[37] On 23 February 2014 Karpeles resigned from the board of the Bitcoin Foundation.[38][39][40]