Feds subpoena Bitcoin exchange MtGox

Things are not getting much better for MtGox, the once-largest Bitcoin exchange on the internet. The company has reportedly been subpoenaed by federal investigators in the United States, and their CEO has asked employees for their silence.

MtGox CEO Mark Karpeles issued a statement on Wednesday to reassure customers that he’s at work on resolving complications that have caused panic among the Bitcoin community in recent days.

“As there is a lot of speculation regarding MtGox and its future, I would like to use this opportunity to reassure everyone that I am still in Japan, and working very hard with the support of different parties to find a solution to our recent issues,” the chief executive wrote.

Earlier this week on Monday, a leaked internal MtGox “crisis strategy” document suggesting that the exchange site had been hacked and hundreds of millions of dollars’ worth of the cryptocurrency stolen began to circulate online. The MtGox website went dark soon after, and all tweets from its Twitter account disappeared at once.

Is someone sabotaging MtGox or is something fishy going on with the company? This seems like it would have to be a giant blow for the bitcoin currency.

According to the Wall Street Journal, however, federal investigators aren’t likely to have much difficulty getting dirt on MtGox. Late Tuesday evening, WSJ reporter Christopher Matthews said a person familiar with the matter confirmed to the paper that MtGox received a subpoena from federal prosecutors in New York.

It's hard to say exactly what's is going on, but I can't help but wonder if someone has a hit put out on the bitcoin currency. Or maybe this company is dirty. Hopefully we'll get the truth.


Here is the link to the article

In my opinion Mt. Gox is simply a dirty company. I trade bitcoins, have been doing so for over a year now. There are several other exchanges on the internet that take their customers much more seriously than Mt. Gox ever did. Basically what happened was, there was a "quirk" in Bitcoin's protocol which allowed some hackers to trick exchanges into withdrawing more money than they had.

It is important to note the difference - this was not a problem with bitcoin itself it has been known about and was designed intentionally, but basically it means that exchanges must keep their records in a certain way and also use proper trading software or else exploits can be used. I.e. A person could attempt to withdraw 100$ in bitcoin over and over again (by clicking the button, sending multiple requests) and ultimately every once in a while they would be successful in withdrawing more than they had from the exchange...When this came out, mostly all bitcoin exchanges went down for maintenence and in less than 24 hours they all had a fix, no coins were stolen, and business was going as usual. Mt. Gox on the other hand froze all withdrawals, and pretty much paused it's market for 2+ weeks and NOW they are trying to claim all the money is gone.

In my honest opinion, this was simply a heist. Mt Gox developers knew of this issue and knew they could exploit it themselves whilst blaming hackers. How do you not notice hundreds of millions dissapearring from your customer's accounts? It's completely bogus. This Mark guy is a fraud and should be brought up on charges. Either way he is already a dead man, people take their bitcoins seriously. I think this guy has already sold the majority of the stolen bitcoin through other exchanges and is sitting on a beach as we speak.....

Its the perfect crime really - hundreds of millions of $ in anonymous currency, total control of this currency, no laws on the books on this currency, and an unregulated market. Hell what crimes could he even be charged with? He could be sued, but Im sure somewhere in those T&C's nobody reads it says Mt. Gox isnt responsible for any funds. - I personally never used Mt. Gox, it was really then ONLY exchange where you were forced to tie a real identity to an anonymous currency. That never made any sense to me and idk why anybody used it...

/Rant off.

One thing is for sure. With this fed's subphonea and all this Bitcoin trouble in the news lately, it is just a matter of time before big time companies and wall street money take over bitcoin and the exchanges. After that comes regulation if they are taking it seriously. Which sucks, I love trading on these unregulated markets. Such volitility.

reply to post by lightedhype


there certainly seems to be a misinformation campaign against bit coin in general, Equating weakness in regulation (crooked exchanges, stock price manipulation) with weakness in currency.

The truth is those weaknesses exist in all currency, and fraud happens all the time their as well.

The reason there are so many stories and events like this, is because it is a very promising currency, and it new, as with anything new there are growing pains.

lightedhype
In my opinion Mt. Gox is simply a dirty company. I trade bitcoins, have been doing so for over a year now. There are several other exchanges on the internet that take their customers much more seriously than Mt. Gox ever did. Basically what happened was, there was a "quirk" in Bitcoin's protocol which allowed some hackers to trick exchanges into withdrawing more money than they had.

It is important to note the difference - this was not a problem with bitcoin itself it has been known about and was designed intentionally, but basically it means that exchanges must keep their records in a certain way and also use proper trading software or else exploits can be used. I.e. A person could attempt to withdraw 100$ in bitcoin over and over again (by clicking the button, sending multiple requests) and ultimately every once in a while they would be successful in withdrawing more than they had from the exchange...When this came out, mostly all bitcoin exchanges went down for maintenence and in less than 24 hours they all had a fix, no coins were stolen, and business was going as usual. Mt. Gox on the other hand froze all withdrawals, and pretty much paused it's market for 2+ weeks and NOW they are trying to claim all the money is gone.

In my honest opinion, this was simply a heist.

My thoughts exactly I understand the system very well and people setup these websites. Run them for a time and then steal everyones money. If you are not expected interest in return or its not an investment its not legally protected. They will throw you in prison for screwing with securities. However anyone running these sites can steal your money legally. No precedent has been or likely will be set. Precedent has been set on using BTC to invest. In that case its ruled a security and that will earn you a nice stretch in fed prison for stealing that from someone.

Just wanna let anyone know if they have been affected by this: There are plans of a class action law suit against Mt Gox.
Interesting how the subpoena will play out.

reply to post by dreamingawake


They immediately filed for bankruptcy. Hows that gonna play out?