Mt. Gox demise as told by a Bitcoin insider | Hacker News Reader

Mt. Gox demise as told by a Bitcoin insider

bloomberg.com

140 pointslelf159 comments

FYI, this “Bitcoin Insider” (there should be no such thing in a decentralized currency?) apparently took $5M from mtgox, claiming he could get them through regulation in the U.S. (he did no such thing)... then sued them for $16B after they went bankrupt, holding the thousands of creditors hostage for years... so far.

And apparently now fortress will give him (CoinLab) $11M to move (slightly) out of the way.

Yeah, Vessenes is so far inside that he has a massive conflict of interest in this case. He's also acted in pretty bad faith. Here's the story from a knowledgeable outsider: https://blog.wizsec.jp/2019/04/coinlab-v-mtgox-imaginarium-o...

Even putting aside the Mt. Gox bankruptcy, the original contract with CoinLab looks pretty bad: https://www.courtlistener.com/recap/gov.uscourts.wawd.192566... They agreed on damages of $50M if either side breached the contract but neither party ever had nearly that much money and the deal was only worth less than $1M per year. IANAL but this seems like a dumb suicide pact.

> IANAL but this seems like a dumb suicide pact.

IANAL either, but those sound like punitive damages, which are unenforceable. The court could accept the assessment in the contract, but if it's blatantly unreasonable, they are supposed to pick a value that more accurately matches the damage incurred due to the breach.

Not that I would want to be in a situation where you have to depend on that...

They’re called liquidated damages and they’re typically only enforceable when they are reasonably close to the actual monetary harm that would be caused by a breach of a contract.

We know today the the FBI sought to destroy bitcoin as a policy objective. The double posting was used inside the trusted network. To undermine the core function, in the end FBI agents went to jail for their own criminal actions - MT Gox was useful for media purposes

Being directly involved in this I'm not going to comment as of the veracity of the article myself, but rather point to a response of when this was posted on twitter (look at the extra responses for some fact checking):

https://twitter.com/wizsecurity/status/1355973512012292096

Mark, the security errors in Mt Gox cost me sums of money that would have completely changed the life of myself and my family. Mostly I have moved on from this, but occasionally I multiply my Mt Gox holdings by the current price of Bitcoin and imagine how life could be. I have never heard you express sorrow for the individuals whose lives you so negatively impacted.

I have no idea if you have plans to make amends for this. Even now, the top of r/MtGoxInsolvency is a post about opening an exchange again to earn money back for the creditors. Do you have any thoughts on how to make things right? https://www.reddit.com/r/mtgoxinsolvency/comments/ldnrxv/reo.... Yes of course I'm a part of the legal proceedings, but those seem to never end, and seem unlikely to bring any significant recompense.

I can't imagine living a life where so many people direct such incredible ill will towards myself, as you live. Especially given that early Bitcoin folks were often disreputable, and the amount of money you cost them, I assume you must have concerns for your own physical safety.

I hope that you'll consider those of us who are still hurt by your negligence by choosing your words and presence carefully.

> occasionally I multiply my Mt Gox holdings by the current price of Bitcoin and imagine how life could be

I often have flashbacks to that one tweet I saw many many years ago saying „Bitcoin reaches USD parity“. I was considering investing a thousand bucks at that time, just for fun.

I would be 37 million dollars rich today!

Who am I kidding.

What would have actually happened is I would have sold everything once my money doubled to 2 USD/BTC, and then panicked seeing it rise and rise, bought in again right before a crash and sold everything with a huge loss.

So realistically, you should take what the Bitcoins you lost were worth at that time, and multiply it 2-3 times if you‘re lucky, and that‘s it.

Most of the stories of people getting rich with bitcoin are:

- people invested in the ecosystem, eg creators of exchanges etc

- true believers (rare)

- celebrities like the Winklevosses who actively invested large amounts of money with some kind of plan

- people who forgot a harddrive from 2010 with 100 bitcoins and found it again in 2018. (or like MtGox, where they were stuck in liquidation for so long that the assets are worth billions now)

If you‘re not in one of those groups, I think you realistically do not need to worry about having lost anything more than a few single digit multiples of your Bitcoins worth in dollars back then.

Cryptopia was hacked a year or two ago. I had a diversified portfolio if shitcoins, but no idea which.

They starting the legal process soon so I might be millionaire soon

Dogecoin is fucking killing it...don't ask me or my discarded hard drive during a health crisis how I know.

I am sorry for the situation and the way things and have expressed sorrow continuously, starting with the bankruptcy press conference, and on multiple occasions. I have been helping people who contacted me or who posted on reddit, been in touch with MtGoxLegal and other creditor groups, and generally tried to keep everyone aware of their rights and needed procedures to be into the bankruptcy. I also have made sure third parties wouldn't enter the process in order to benefit from it (see Brock Pierce for example) and still continue today to offer help on reddit to those in need.

I do not think me being involved in a new exchange would help make money for creditors. I have provided counseling to other exchanges who asked me to on how to avoid repeating what happened with MtGox and tried to push as much as possible for MtGox creditors to get as much as possible. When I was due to receive over a billion dollar as share holder in the bankruptcy I also made sure everyone knew about it because switching back to a civil rehabilitation needed the support for most creditors and wasn't something I could do (since I'm not a creditor myself).

But of course if I can help in something more I'd be happy to. You will likely receive more than you initially deposited into MtGox through the bankruptcy, but I do not know what you call "significant recompense."

Also most creditors I have been interacting with have been thankful for the help and I do not think that many people still direct much ill toward me, at least it doesn't feel that way anymore, but that may have to do with the lack of death threats and insults on Twitter and such. I'm hoping everyone will be eventually able to move on, but first the bankruptcy must end, and CoinLab is preventing exactly that from happening.

I have been choosing my words carefully, even going as far as avoiding voicing my own opinion here and instead linking to some fact checking from another MtGox creditor. I will however still say that CoinLab and more specifically Peter is clearly abusing his position and using stalling techniques to force MtGox and creditors to accept a settlement rather than having the whole process taking many more years, effectively taking everyone hostage for his own gain.

Staying silent will not do anything for creditors, and CoinLab clearly do not have creditors' benefit in mind. I do think this is important to point out.

As a counterpoint, I would like to thank you Mark for what you built, and the movement you started. You did change my life and the lives of many others, enabling us to build the future. Lessons were learned by many. NYKNYC.

We cannot change the past, and we must build for the future. I think when the dust settles, you will be remembered as a pioneer and economy builder.

Agreed. Those who fell at the beginning are those who paved the way. Mark is a hero. Nothing less.

Is this coordinated image rehabilitation or something?

You authoritatively confirmed that the account is who it says it is as your first involvement in this thread. Was that based on firsthand knowledge? I’m really suspicious about your involvement here and I’m starting to suspect someone figured out just how easily HN can be leveraged if the commentary remains civil and lionizes the right people late on a Friday night when everyone is looking the other way.

People who rescue children from fires are heroes. People who make amends for significant errors, after aggressively trying to obfuscate them for many years, have some measure of retroactive integrity. There’s a difference and while he certainly deserves credit, he’s quite obviously manipulating this discussion in real time (I’m not saying it, but I’m saying it, wink wink).

Call me cynical, call me uncivil, whatever, but what you just said is a giant pile of the absolute worst excrement to ever cross this site. I’m not even involved in this drama, I’ve never speculated on Bitcoin, I have no ill feelings for this person, he cost me nothing, but holy Moses is what you’re doing here one of the most transparent efforts I’ve ever seen.

The more this back room stuff goes on in crypto, where we are all subjected to very public he said she said spats and expected to choose who’s our hero in this adventure and navigate who’s more full of shit, the less claim cryptocurrency has to legitimacy. I’m amazed that’s not obvious to you.

Please assume good faith. I do not believe there is a image rehabilitation campaign, nor are nefarious forces trying to sway public opinion late Friday night. Don't waste too many brain cycles chasing ghosts. We all are just people trying to get by in life.

There is no conspiracy here :-)

That eased all my concerns. Thank you. I feel better.

Rasengan is Andrew Lee, cofounder of London Trust Media, parent company of Private Internet Access. He has been personal friends with Mark Karpeles since well before Mark's fraud was discovered. Here's a PR piece he put out when he hired Mark as CTO after he was let out of prison. Yes you read that right, an infamous fraudster who couldn't even be bothered to use version control on MtGox who lied day after day for years and who ran his business into the ground and was imprisoned for it was hired as a CTO for a major VPN company.

https://www.privateinternetaccess.com/blog/why-i-hired-mt-go...

Rasengan has an obvious bias here, you can call that whatever you want but whatever you call it, he's not a neutral third party. I'm not either, Mark Karpeles stole a great deal of money from me and many others on this site. Rasengan has in the past given this same spiel on HN trying to make Mark out to be some kind of victim of circumstance.

>People who make amends for significant errors, after aggressively trying to obfuscate them for many years, have some measure of retroactive integrity.

At no point has Mark Karpeles done anything at all that could objectively be described as making amends for anything. Jed McCaleb previously indicated that Mark Karpeles was aware from when he originally made the deal for buying most of MtGox that the exchange was already insolvent. He lied to users for years and claimed that MtGox had a cold storage system comprised of 3 geographically disparate locations, of which access to 2 were required to move funds out of cold storage and 95% of customer funds were kept out of the hot wallets. In reality that never existed, and Mark just continually kept emptying the cold wallets that were just stored in their office into the hot wallet. The hot wallet was compromised in a hack, Mark knew the hot wallet was wiped out in the hack, he didn't rotate keys, he just kept dumping our money into a known compromised address and never once bothered to check just how much money was missing until it was gone. The only saving grace was that Mark was so incompetent and blaise with managing hundreds of millions of dollars worth of other peoples money that he quite literally forgot about 200,000 BTC. If he had remembered it, there's no reason to believe that he wouldn't have just kept dumping it in and push the collapse back by another 6 months.

Since the collapse everything's been in the hands of the trustee for MtGox and Tibanne. If Mark Karpeles told me the sky was blue I'd have to go outside and check.

Gox or Mark didn't steal any money from you, you lost the money you had left in the casino. While it might be true the casino lost it, it was no longer yours the moment you transferred it out of your own wallet. I'm sorry for your loss.

"I can’t give you your money, it isn’t here, it’s in Frank’s house and Joe’s house".

Thank you for posting this. I was aware of the bankruptcy press conference, though honestly (but perhaps incorrectly) perceived most of it as "My lawyer made me say this". I feel your message here which you posted even after all these years does convey true regret.

I agree with you on the idea of a new exchange. While it is a hopeful idea, ultimately I don't think that it would be very fruitful. In my opinion, it is about as far fetched as the idea of working with the US Government to get the feds seized from BTC-e to repay the creditors (because apparently the BTC-e folks were the ones who executed the Gox attack?). I assume you agree getting coins from the US Gov't is far fetched.

Thank you for highlighting CoinLab's (Peter's) actions. I am so very ready for the bankruptcy to be over, I can only imagine how ready you are to move on from it.

I appreciate the thoughtfulness you've given to your words. Please don't stay silent.

> You will likely receive more than you initially deposited into MtGox through the bankruptcy, but I do not know what you call "significant recompense."

I was one of those claimants who sold approximately the account value north of 1000 Bitcoins to bring myself in what I thought was a better position when all of your withdrawal methods were blocked. I attempted to withdraw BTC into BitcoinBuilder, but you guys had my account flagged for additional review from a previous TX I had made weeks ago. I had literally zero other options and you guys locked up all of my balance.

Some recompense could be given to now fiat claimants who sold all of their BTC holdings into USD _the day_ that Mt.Gox shut down. There were quite a handful of individuals who did with the same rationale this in the hours leading up to the website shutdown. I'm pretty sure they are the minority of claimant cases looking at /r/MtgoxInsolvency posts.

Today, the difference in market value those few hours for me would have been approximately been $7.9 MM vs. ~500k USD + penalties. There were zero guidance the days that you had your withdrawals blocked off, and any communication of what was going on especially in those few hours would have made such a difference in the 7 years that we/I had our money locked up.

Please look into these accounts that had this sort of activity _in the hours_ leading up to Mt. Gox's shutdown. If any group would be significantly impacted by any recompense, it would be us.

CoinLab is a joke. Calling his actions abusive is kind.

I originally started my HN account to ask what I should do when my cofounder screwed me out of $12.8 million I was owed as the result of the sale of our company that he forced me out of and sold without telling me. My username came from that era of my life. I cannot even begin to describe how different my life would be had my cofounder not done this. It is unlikely that I will ever again create something that valuable, and accordingly I have a profound sense of loss over it.

So speaking from personal experience...while your anger is completely justified, you have to let it go, or it will destroy you. It’s just one of those things - a random, traumatic event that instantly and irrevocably changes the trajectory of your life, that you can do nothing about. These are jarring reminders that the world is a cold and unfair place, that the universe is not in fact looking out for us, and that people are not “mostly good” as many of us were raised to believe. But holding grudges, even against people that have inflicted unimaginable trauma on you, only hurts you.

Yes you are correct. Thankfully, as mentioned, I have mostly moved on from this. This appears to be his first post on HN, so, I felt compelled to comment to make him aware that his presence in forums, etc can be upsetting to people.

And, while I don't think he should necessarily retreat from forums... I just hope that he is conscious of how his presence and words may affect people.

I really don't get how someone can casually screw someone out of such vast sums of money and not live in fear watching their back the rest of their life. They must really be confident the individual would remain mentally stable. Not everyone will just walk away quietly and meditate, some people will definitely try to find the best way to put a bullet in your head.

If you're going to screw someone, you should at least come up with some cover story that shifts the blame away from you, and even then you better hope the truth isn't discovered.

I was very angry at first, but yes, he knew that I was not the type of person that would put a bullet in his head. He didn’t do anything to shift blame - he couldn’t. My name was all over the patents the company held, so he couldn’t deny my participation. He simply stopped talking to me and then used his lawyers to attempt to silence me.

Unfortunately, karma just is not a thing. Among more than a dozen homes he owns are two mansions in California, each over 10k sq ft (at least one of which was paid for with my money), within about 10 minutes of each other. One is on a bluff overlooking the ocean, and the other is more inland where he rides horses with his wife, who is roughly half his age and who was married to someone else until it became obvious to her then-husband that she was pregnant with my business partner’s child. Ironically, among his other business ventures today is a Christian magazine/movie production company.

I will never see justice served upon him. He will continue to live a fabulous life and I, quite likely, won’t. But being angry over it does nothing for me.

The arc of the moral universe is long but it bends toward justice.

> while your anger is completely justified, you have to let it go, or it will destroy you

Cheers to you for this. I know I would not be able to do the same.

Why do you believe you will never be able to start another project worth millions? If you did it once, you can do it again.

You are even starting out ahead as you can impress investors with your past project!

I have been trying ever since this happened, and so far have only had marginal success. You never know, I suppose, but that project sold for $64 million to a multibillion dollar company (Equifax). It is statistically unlikely that I will ever create something that valuable again. I am now in the DeFi space, doing some interesting things, so there is a possibility - but life has taught me not to hold my breath.

> occasionally I multiply my Mt Gox holdings by the current price of Bitcoin and imagine how life could be.

While this obviously doesn't justify what happened with Mt Gox, there was plenty of time afterward to reinvest at significantly lower prices than today, so I don't think it's fair to attribute all those losses to him.

MtGOX was one of a few situations which would have led me to having a million in the bank if not for seemingly small changes. Alas, it didn’t happen, and honestly there were many other ways that it would have otherwise not happened. Sure its fun to multiply tens of bitcoins I once owned by the all time high, but this is about as effective as thinking about picking different lottery numbers. It would be nice if I got every coin back from mtgox, my balance would sell for something between a nice car and a nice house these days, but this is reality, reality has risks, and I made risky choices and got the results which I did.

The writing was on the wall months before the attack. Mt Gox's usability plummeted and rumors or pentesting circulated. Orders started experiencing increasing latency.

I watched that tower fall from a safe distance. I'm not saying it's your fault that you got dragged into the Bitcoin double spend attack, but it's simply part of the game. Easy come, easy go. Don't get caught up imagining fake money you never had. It will weight heavily on your psyche forever.

It’s not Marks foul. You have the money transferred to an exchange to mage a transaction not to hold it and wait for >40k. You would sold at 200,1000,10000.....

Get over it. You were the one who tried to get rich and failed. Just accept that and move on. Try again if you want to. But don't blame someone else for your risky investments.

This is a very thinly veiled threat.

> I assume you must have concerns for your own physical safety.

> I hope that you'll consider those of us who are still hurt by your negligence by choosing your words and presence carefully.

This is a clumsy threat and isn't really appropriate.

No threat intended. In my third paragraph I attempted to empathize with him. Yes, he cost me money but he is still human.

I truly do think it must be scary for him. I don't know of your involvement in Bitcoin at the time, but there was a much higher percentage of 'not good people' involved then. In the months after the Gox news originally broke, many people were discussing Mark's safety. I still wonder about his safety every time there is a major milestone in the Gox case - and will again when the case finally settles.

In my final paragraph I communicated that Mark's presence here, and the way he communicates will affect members of this community - especially important since this seems to be his first post here.

The default twitter algo selection of comments is random gibberish. Anything more specific to point to?

Here's the thread unrolled: https://threader.app/conversation/1355926433646972933/UcAWDz...

I think he's pointing to the comments by @wizsecurity specifically, in response to the @bloomberg one.

The WizSecurity comments are shown as a thread, those are the most relevant imo

> You will likely receive more than you initially deposited into MtGox through the bankruptcy, but I do not know what you call "significant recompense."

Please look into these accounts that had this sort of activity _in the hours_ leading up to Mt. Gox's shutdown. If any group would be significantly impacted by any recompense, it would be us

> Being directly involved in this I'm not going to comment as of the veracity...

Why not? Just be transparent.

When's the book coming out?

Will it be before or after Netflix/Prime/HBO+ releases a documentary or 'based on real events' type of show?

Could be even a real feature-film directed by Fincher or Scorsese...

For those who don't know, MagicalTux is Mark Karpeles, owner and CEO of Mt Gox. Assuming this is his real account.

And for what it's worth, I agree that this is a bad article based on what I know about the situation. Bloomberg reporting in general is questionable these days if you ask me. I don't trust them since the false Supermicro hack story (never retracted BTW) and I've seen several other bad stories from them since then.

Yep this is indeed me. This article would clearly have its place on PRNewsWire rather than Bloomberg.

Doesn't Bloomberg have a reputation as being shamelessly pay-for-play?

So you are commenting on the veracity of the article, then?

I didn't initially, but if you're reading that far in the comments I guess it can't be avoided. People need to know what CoinLab is trying to do.

> I didn't initially, but if you're reading that far in the comments I guess it can't be avoided. People need to know what CoinLab is trying to do.

Mark, for all the controversy surrounding your case and the obscene level of malice in the Japanese court system, reflected in its conviction rate, do you think there will ever be a way for you to tell your side of the story at length? Like a series of long format podcasts with a break down of the day by day, week by week kind of format?

Are there gag orders or something like that until the matter is resolved?

Because there are still so many questions left unanswered, I'm still wondering to this day who or what was behind that that 'Muscle group' thing offering to pay xx cents on the dollar per outstanding Bitcoin/fiat locked up on Gox. I always felt it was some of the members of The Foundation wanting to capitalize on the seizure of the funds and eventual reconciliation--which still has not happened.

I'd rather keep our old school Bitcoiner-style banter out of this on HN, rare for someone like me given my post history, because I honestly think you should really reach out to someone here with an independent media platform to get the ball rolling on being able to get your side of the story out there.

It's one that did put is back as a Community, Platform and Network many years, but it also showed just corrupt the legal systems is in many countries (US/Japan) and how they operate to what length they will go to get a conviction and 'settle' a matter to move on and try to contain a technology they entirely disregarded a year or two before.

The crazy thing is how much deeper it all goes and certainly has all the elements of a series of movies (at least a trilogy) if someone wanted to make it a script: DPR/Ross Silk Road case, those 2 Feds who stole the BTC, BTC-e seizure, Alexander Vinnik arrest in Greece alleging to be behind the MTGOX hack(s), variety Jones's arrest in Thailand. Not to mention guys like Gonzog, or Ver...

Honestly, after 10 years in Bitcoin its why I can't find or get excited about 95% of most movie, gamess or TV shows anymore. Nothing beats that last decade in Bitcoin, its been an amazing but incredibly wild ride!

Sidenote: Sorry to hear about all your troubles, our tempers flared and things got out of hand as a community (myself included) back then; but I want you to know that no one deserved what happened to you and your family--I also have friends in the BTC community that went to jail/prison due to State overreach, many of them irreparably scarred from it.

You look and seem much more healthy now then back then and I sincerely hope you found a way to make peace with it all and were able to move on with your life.

> The crazy thing is how much deeper it all goes and certainly has all the elements of a series of movies (at least a trilogy) if someone wanted to make it a script: DPR/Ross Silk Road case, those 2 Feds who stole the BTC, BTC-e seizure, Alexander Vinnik arrest in Greece alleging to be behind the MTGOX hack(s), variety Jones's arrest in Thailand. Not to mention guys like Gonzog, or Ver...

As someone who is only loosely aware of the story, is there a good place to learn more (I'm pretty sure I could spend countless nights researching this, I'm hoping for something like a detailed article or a particularly insightful forum post)? And I realize part of the issue is the story hasn't been told yet, but you still know a lot more than I do.

> As someone who is only loosely aware of the story, is there a good place to learn more (I'm pretty sure I could spend countless nights researching this, I'm hoping for something like a detailed article or a particularly insightful forum post)? And I realize part of the issue is the story hasn't been told yet, but you still know a lot more than I do.

It really goes deep, and a lot of it was events as they happened in real time for those of in the Community. Bitcoin Talk Forum and reddit still have many of those threads if you want to go deep.

But here are some links I could find to you get familiarized with all of this [0] [1] at least until you decide to go further.

As you mentioned, so much of this has not been addressed and their are so many parties vying to hijack the narrative, which include Nation States and their respective agencies and bureaus withing them which is why I'd like to hear Mark's story (starting with being brought in for questioning by the Secret Service, FBI, and DHS) be told over a series of podcasts (the lowest barrier of entry with long format). I'm sure we could crowd source this with BTC to make it happen if he ever decides to do it.

I'm just not sure if Mark would be legally allowed to do that at this point because of the ongoing reconciliation process.

0: https://blockonomi.com/mt-gox-hack/

1: https://www.techspot.com/news/61603-weekend-tech-reading-mar...

> the false Supermicro hack story (never retracted BTW)

So the idea is that Bloomberg, a company owned by a multibillionaire, published a story full of libel, and for some inexplicable reason none of the corporations damaged by that story sued them?

Or maybe ... the story is true, and those mentioned found it embarrassing, so they put out denials to the press and social media that will never have to be scrutinized (say, under testimonial oath in a deposition)?

And what, maybe made some kind of deal to not follow up on it? It just disappeared. No retraction, but I also don't recall seeing further articles in support/defending its position/etc. The entire situation was very suspect from every angle.

Or maybe suing for libel brings a lot of attention so unless it's very bad most companies will opt not to sue, especially if the target is a major news organization.

Er, Supermicro servers being surreptitiously implanted and installed in customer networks are existentially-threatening allegations against their business. I struggle to imagine what “very bad” would be in your view if that doesn’t rise to the bar.

More than the contents, the impact of the news on business is what would be used to decide. If most people think the news is likely fake there's no point giving extra attention to it by suing for libel. If it has enough impact to bring the company toward bankruptcy it will be an issue. Tbqh I wasn't even aware of that story until now.

https://en.wikipedia.org/wiki/Streisand_effect

I was reminded of this recently by a fursuit company issuing a C&D over an accusation most people had forgotten about, for a tweet that was almost half a year old at that point.

24 hours later, the tweet from the target of the C&D has over 7000 retweets and the response from the company has almost 1400 quote retweets yelling at them. Many of the angry responses have as many retweets as the company's tweet.

Link?

I forgot to link it.

https://twitter.com/qutens_/status/1357496129659707392

> Tbqh I wasn't even aware of that story until now.

Hopefully your CTO was.

If that were true, those companies absolutely would have filed libel cases, because that sort of harm is exactly what libel suits are intended to redress.

Most likely, the story is true enough that the companies do not have a case for libel, even if specific details may be wrong, and the companies don't want a lawsuit because that opens then up to discovery proving that the foundational elements of the story are true.

> Or maybe ... the story is true, and those mentioned found it embarrassing, so they put out denials to the press and social media that will never have to be scrutinized (say, under testimonial oath in a deposition)?

These are publicly traded companies - everything they say is scrutinized.

What's not scrutinized is internal communications and logs, which would be fair game in discovery in event of a lawsuit against a media organization, which are uniquely suited to defend those types of lawsuits.

If Bloomberg was operating in good faith (such as being tricked by a lying source), would they still be liable for libel?

Wouldn't it just take one person and a single piece of hardware to confirm? And yet not anyone has confirmed it?

To this very day, the majority of non technical executives having a security conversation raise with me "so we're definitely not using Supermicro right" as their top security concern. It's incredible how much that story managed to achieve.

If they are using Intel (AMT, vPro) or even AMD, or anything that can do DMA without GMU, they are no better than using Supermicro.

It’s real (re account)!

>>“It could’ve been a trillion-dollar company,” Vessenes said. “It’s so sad.” The current $16 billion CoinLab claim against Mt. Gox is based on what the company thinks their portion of Mt. Gox would be worth if it had been managed well, he said.

Quoting this part of the article to emphasize the absurdity of CoinLab's assertion.

>>Peter Vessenes has spent years trying to recoup lost coins

This article byline is strange because the CoinLab claim is entirely for cash/fiat damages, and not for the remaining cryptocurrency that the estate holds. Creditors know this because CoinLab's claim is evidently still incurring delay and interest, which the Tokyo District Court only affords to monetary Mt. Gox claims.

If the US part of Mt. Gox was managed well it would today be... Coinbase? Which is soon to be worth $63B.

The absurd hypothetical that CoinLab could have been Coinbase in some strange parallel universe should not take priority in the bankruptcy/insolvency proceedings over the claims of Mt. Gox users who held actual dollar/cryptocurrency assets on the exchange.

CoinLab's lawsuit has delayed the distribution process and their absurd claims are part of the reason why creditors with actual legitimate claims (i.e. Mt. Gox users) are still waiting for the remaining assets to be distributed.

It is like the bank has robbery and 20% of the money is stolen, but instead of distributing the 80% among the customers, it is given to the bank's US partner that said "oh hey we could've been the next big bank in the US if the other bank didn't get robbed".

Coinbase didn't need Mt. Gox to become what they are today. I'm not sure this line of reasoning holds much water.

Perhaps if we were to follow Vessennes' absurd chain of reasoning to its logical conclusion, CoinLab itself should be countersued by Mt. Gox creditors for failing to become as successful as Coinbase given their head start in the US.

I think Coinbase is successful because it's the "default" exchange for noobs in the US. Mt. Gox was the default exchange until it failed and if it had never failed (which is a longshot assumption, granted) then it would probably still be the default, largest, and most valuable US exchange today. (Of course, non-US exchanges like BitMEX are far larger because they offer more "exciting" products.)

CoinLab itself should be countersued by Mt. Gox creditors for failing to become as successful as Coinbase given their head start in the US.

CoinLab's deal with Mt. Gox was never consummated so they did not have any head start.

Coinbase is successful because it was the fist exchange that did things by the book and has a well deserved reputation for competence and law abiding conduct.

Coinbase did need something like Mt. Gox to become what they are today, but not in the sense you imply. The whole Mt. Gox episode opened people's eyes up to the fact that large institutional frauds could take place with their Bitcoin wealth, and that there indeed was a need for a well managed reputable provider for these services. Bad actors can come in many sizes, and a bad actor of Mt. Gox scale also brought about plenty of controversy and media attention that was heaped on this subject. It benefited Coinbase in no small part to capitalize on this already acknowledged need for a business.

IIRC, Brian Armstrong (CEO coinbase) was at the top of the MtGox volume leaderboard, because he relied them for Coinbase's retail exchange.

I know very little about this but shouldn’t customer deposits be handled separately from other creditors? Why should CoinLab get anything?

CoinLab's lawsuit is a big part of the reason why creditors with actual legitimate claims still haven't received their share of the remaining assets. Somehow CoinLab thinks their claim, which hinges on vague and unrealistic what-ifs, should have priority over Mt. Gox users who held dollar/cryptocurrency assets in their Mt. Gox accounts. Obviously CoinLab's ridiculous claims will eventually be thrown out, but it has severely delayed the insolvency proceedings and eventual distribution process.

Vessenes is not a "Bitcoin insider", he is a snake who seeks to steal billions from individual users who lost assets that they had held with Mt. Gox.

Here is what former Mt. Gox users who are still waiting for the distribution process think of this Bloomberg article: https://old.reddit.com/r/mtgoxinsolvency/comments/l9m3iz/coi...

This article starts off with an ambiguous premise. The SEC Enforcement Division asking about Mt Gox in early 2013 has nothing to do with Mt Gox being in securities trouble. It more likely means the SEC was following funds in a bitcoin transaction that were deposited or transferred to that exchange. Or fiat transferred by an investor following a securities promoter’s instruction on how to invest via bitcoin.

The article then switches to other issues about Mt Gox that also never involve the SEC or securities issues again.

There is a pervasive meme amongst cryptocurrency enthusiasts of the SEC being an all encompassing police. It is weird and counterproductive.

I am a MtGox creditor and intermittently get offers from Fortress Capital to buy my BTC for some % of its value. I tell them where to stick it.

It now looks like Vessenes is in cahoots with Fortress Capital in an arrangement where they drag out the frivolous coinlab lawsuit which encourages desperate creditors to sell out to Fortress.

Vessenes is really an awful piece of subhuman filth. He has zero claim to anything, but is causing misery to thousands of creditors. I hope all his descendents continue to be aware of this.

The Darknet Diaries episode on Mt. Gox was pretty good: https://darknetdiaries.com/episode/9/

It's always amazed me how anti-crypto and behind the times (about bitcoin) this forum has been. Remember your imagination for the possibilities of the early web and computers.

It may be a matter of demographics. Slashdot had the same effect with other new technology (ipod. Less space than a nomad). And Usenet or irc forums were full of people discounting myspace, FB, and other newer technologies.

Hacker news has changed a lot since the time I joined. I came from /. And osnews . And initially it was strongly pro business . Now it has became more "liberal " and pro open source.

Curious if you've found a place that feels the way that HN did back then.

If you do, let me know!!

Somedays it really looks like I'm gonna see here AARP ads any time soon!

The community is aging and getting out of touch with the market without even realizing it

Not really but mainly because I haven't looked. I personally lean more towards left/socialist views. So the current HN groupthink is more aligned with my views. Maybe I am part of the problem: a group of people that joined HN and affected the discourse.

Yeah it’s a collective “just use Rsync” blindness. I think Defi is pretty exciting and once it’s mainstream with more regulated options with KYC and tokens backed by fully audited companies it has some amazing potential.

Also see https://news.ycombinator.com/item?id=26041057 - HN wants it’s mp3s, so why doesn’t it want it’s money?

Exactly! I find it so surprising how on one side stories like the one you linked are heavily upvoted, and many here complain about Google, Facebook, monopolies, etc. But when it comes to z technology that is disruptive enough to solve many of the underlying problems , people are fast to discount it because a certain implementation is slow, inefficient, misused, etc.

The discourse that I would LOVE to see here is HOW to make it better. Is BCH really better? Is XlM? even XRP.

Like when databases are discussed, we get interesting points for Postgres or MySQL or even Mongo. That's the constructive view.

Bitcoin as had the better part of decade and it's still practically useless in the real world.

Case in point I guess. It is kind of amazing how one of the most important recent technological developments has been written off for more than a decade by the users of this site.

Same with TypeScript for a long time as well, and then there was a magical turning point somehow that the entire zerg all of a sudden discovered static typing was actually useful.

For one of the best sites for discussing the latest happenings in the computer software world, crypto has somehow been consistently rejected as useless when it beats other stores of value in almost every metric.

Crypto has value simply because it is better at storing value than the mediums that came before it.

> Crypto has value simply because it is better at storing value than the mediums that came before it.

Is this a serious claim? The last one and a half months have seen extraordinary speculation in cryptocurrency markets, even by the standards of cryptocurrencies. Lots of wealth is being produced; relatively little is being stored.

It's in the news everyday. Huge investment firms diversifying into crypto. So yes, value is being stored. The market cap of cypto has been rising exponentially - exactly because it is a good store of value. Which means easy to store, and highly resistant to manipulation and inflation.

> Huge investment firms diversifying into crypto. So yes, value is being stored.

Something being a desirable investment vehicle usually makes it an undesirable store of value: a store of value should be stable and predictable, not subject to significant changes in any direction.

> Which means easy to store, and highly resistant to manipulation and inflation.

These are, again, negative qualities in a store of value. A good store of value is inflates and deflates exactly as much as required to retain its backing value. Inflation means loss of value; deflation represents a liquidity risk when exiting the asset.

More generally, this is an indictment of the cryptocurrency community's basic financial literacy. You can't just call a speculative instrument a "store of value" because every who bought into it in the past two months has seen a positive return; that's just not what it is.

Case in point still. The contradictions you make are astounding. What's more astounding is that you are not even noticing them.

> Huge investment firms diversifying into crypto

> this is an indictment of the cryptocurrency community's basic financial literacy

I suggest that maybe it's you who lacks basic financial (and econ) literacy, not investment firms or the "cryptocurrency community"

> You can't just call a speculative instrument a "store of value" because every who bought into it in the past two months has seen a positive return

No, everyone who bought BTC at _any point in the past_ and didn't sell are seeing positive returns. This is the definition of a good store of value. You are conflating SoV properties with volatility. They are orthogonal. SoV is a long-term play.

> This is the definition of a good store of value.

No, it isn't. Apart from the fact that countless people have lost their shirts to BTC (it's down 6% today! There are losers today!), an asset whose value rises in unchecked proportion to the real economy represents a fundamental liquidity risk: everybody is going to want to sell, but nobody is going to want to buy.

That is why cash is the canonical store of value: not only does it not change (much), but you can exchange it without undermining the value itself.

BTC is liquid enough today for companies to move $1B without moving market (see MicroStrategy). Granted, money (USD specifically) is even more liquid, but that's why it's money -- by definition, money is the most liquid good.

BTC's liquidity has been increasing and will continue to increase in the future, so it's just a matter of time.

And you are again conflating SoV with volatility. Todays cash (USD) is not volatile but it's a terrible SoV. That's why no one is storing their wealth in USD and flee to harder assets (stocks, bonds, gold, and BTC).

Highly recommend this video for how investment firms think about BTC and SoV and how you should too: https://www.youtube.com/watch?v=KlXqfibqb38

> Which means easy to store

Sure, if you want to trust an exchange. But try setting up and running Bitcoin Armory and see how 'easy' that is

> exactly because it is a good store of value

I wouldn't consider highly volatile currencies a "good store of value".

> and highly resistant to manipulation and inflation.

Far from it. An exchange goes tits-up and BTC plummets, and then everyone else follows. It's super susceptible to coordinated pump and dump schemes. Holding any crypto can get you red-flagged by the IRS, and if you don't admit to it most legit exchanges will rat you out. (Better for non-Americans, I guess...)

One of my favorite things to do every now and then is pull up CMC and see just how many coins' performance is a fraction of BTC's. Its funny because at BTC's most volatile times nearly the entire chart is red or green.

> The market cap of cypto has been rising exponentially

Personal pet peeve -- "a lot" is not synonymous with "exponentially." Crypto's market cap is decidedly sublinear on a logarithmic chart.

> exactly because it is a good store of value

If I pre-mine a trillion units of a cryptocurrency and sell one to my dog for $1 then it has a trillion dollar market cap. Whether or not it's a good store of value is a separate claim which needs independent proof.

> easy to store

So long as you never make any mistakes. Mt. Gox did a decent job at storing crypto for awhile ;)

> highly resistant to manipulation

So long as we pretend that Elon's tweets didn't impact dogecoin by >50% and that more broadly a form of word-of-mouth popularity doesn't affect the general public's chance of investing in crypto.

Lots of valuation is being produced, propped up by Tether printing. BTC in itself is an unproductive asset, it costs real money to keep it up and running (some $4M/USD in electricity etc).

Low volatility is a pretty important metric for stores of value. By that metric almost anything other than GME shares is better than cryptocurrency: cash in any hard currency, gold, silver, luxury watches, ...

I guess remind me in 10 years and we'll see how returns on crypto compares to 'stocks, hard currency, gold, silver, luxury watches'

Funny how all of those things are not supply constrained, so they seem to be at a disadvantage from the start. But we'll see.

>I guess remind me in 10 years and we'll see how returns on crypto compares to 'stocks, hard currency, gold, silver, luxury watches'

You're literally supporting the argument of the person you're replying to without even realizing it.

Disproportionately high returns indicates a highly volatile asset, and it's just as likely to go the other way, resulting in staggering losses.

These are not markers of a good, long-term storage asset class.

I didn’t mention “possibility of high returns” as a metric. I said “low volatility”.

I think you misunderstand a store of value. Extremely volatility is not a positive characteristic.

Would you want to be paid in a currency that regularly changes value 5-10% day to day?

There are decentralized cryptocurrencies that have achieved low volatility, such as DAI. I don't think it's ever gotten more than a couple percent from its $1 target price since being created. (I assume it almost never gets talked about because there's no profit from investing in it and hyping it to others.)

DAI is tied directly to the dollar. In what way is it better than a simple bank account for storing value?

The idea behind gold, silver, property, etc as value stores is that they remain valuable regardless of what the currency does. If your value store is the currency itself you might as well just hold the currency.

You get the other benefits of cryptocurrencies: direct control and the ability to store or send it online with no middlemen or custodial risk.

TypeScript was about bringing traditional, proven, approaches to a trendy but immature language. That's exactly the opposite of Bitcoin.

> beats other stores of value in almost every metric.

Which metrics you selected so crypto beats following in "almost every metric"?

- real estate

- gold

- $ in cash

- $ in a bank account

- stocks

Metrics as in how easy is it to store and send, how resistant is it to inflation and manipulation.

- Land - Can't send it.

- Gold - Physical so more difficult to store, secure, send, and verify.

- Cash - Easy to manipulate by the government. How many trillions printed for coronavirus? I wouldn't hold too much of it.

- Stocks - Cant send it. More shares can be created by the board of directors.

Crypto is made to do one thing - store value, and do it well.

Well, technically you can own a gold ETF rather than physical, and whenever you want to send value to someone, sell it and wire them the money (free on Fidelity and takes on the order of as long as a few Bitcoin confirmations). This is not too different in effect from being able to “send gold”.

Anyway... despite the theoretical limitations of cash, hard currencies in practice have proven much, much more stable than Bitcoin. There hasn’t been hyperinflation in any of the major hard currencies (USD, CNY, GBP, EUR/D-Mark, CHF) since the invention of the fiat system.

You can argue that cash can be manipulated and is therefore a worse store of value than Bitcoin but it simply isn’t backed up by concrete evidence in reality

There was no hyperinflation, but inflation is high enough to matter.

Still, overall damage seems far lower than risks of mistakes, hacks, crashed and scams overrunning crypto. Maybe it is not true for super experts, but for average person loses on inflation will be far lower than overall damage from various dangers present in BTC and other.

> Crypto is made to do one thing - store value, and do it well.

Does it really do it well when your "investment" can fluctuate between $5000 to $40K?

So for example land is counterexample to claim that "crypto beats other stores of value in almost every metric."?

Especially given that you can sell it for something used locally and send that? (there is no need to store value and send something using the same method).

Well bitcoin in particular but some crypto is inflationary also

There is nothing anyone could say that would convince you aren't on the OneTruePath(tm) is there?

I would love to have an intelligent debate with you. To respond to your original post. Many people, myself included, find crypto an easier, faster, cheaper way to send large amounts of money versus ACH, wire transfers and western union.

Something that can continue to gain value for 10 years has no practical use?

Someone had better remove the vast majority of the world GDP which is in financial markets.

Financial markets represent ownership of companies that produce things or provide services. Or they are for debt on loans to governments, companies, or people that use it to finance something.

Maybe before 1980 that is a sufficient explanation of abstract capital. It really does not resemble modern reality.

I do, and i see what the web has become now, and it makes me less likely to be giddy about the next new thing. I think we're at a point where the net is no longer novel enough to be magical, and we see the reality is a lot more mundane and even harmful than anyone predicted.

You can't just throw out grand concepts and wish for magic now; there needs to be a lot more reflection on the technologies people introduce. Are they sustainable, in that they can maintain their original purpose? Do they increase the attack surface of people, groups and societies greater than the benefit? Do they require skill and vigilance beyond the average person to use safely?

I don't think optimism and "it will all work out" is a rational position any more.

Possibility of the early Web: getting free overnight air shipping on 50-pund bags of dog food.

Possibility of cryptocurrency: becoming "fuck you" rich in a year without doing any work.

Yeah, you have a point; crypto does have amazing potential.

> becoming "fuck you" rich in a year without doing any work.

That's how most SF tech startups appear to the average blue-collar person.

It's all about perspective.

Ooh I though you were setting up:

Possibility of crypto: getting free overnight air shipping on 50-pund bags of weed

Nothing wrong with hearing voices not within your echo chamber. I always take voices here I don’t agree with with more weight because they might be right.

How are your shitcoins?

God they're doing so well especially today after Tesla announced buying $1.5 billion worth. Thanks for asking.

Still waiting for the 50 or so BTC I had in MtGox when it disappeared. Think I should get what they were worth then, or what they are worth now :D

Would you prefer 100% of what it was worth then or 23% of what it's worth now?

Of course everyone would want the greater of the two. But the claims need to be balanced because some users held cryptocurrency assets while others held dollar assets, and there aren't sufficient assets to return either one. The rehabilitation trustee has already come up with a plan that balances the demands of the various stakeholders, and most people are happy with it. There are many reasons why the assets haven't been distributed yet, but one big reason is because CoinLab keeps parroting their ridiculous claims; obviously CoinLab's lawsuit will be thrown out eventually (because their claims are absurd), but it's part of the reason the distribution keeps getting delayed and likely won't happen until, say, 2022-2023.

Only in January 2021 did CoinLab finally say, okay, we will agree that the distribution of 90% of the assets can start while our lawsuit continues (they are ridiculously demanding that CoinLab get some big portion of the other 10%, so they want that money held up until their absurd lawsuit is finally thrown out). See https://www.bloomberg.com/news/articles/2021-01-15/coinlab-r...

Why 23%? Seems arbitrary. Is that the amount in BTC that is expected to be paid out to creditors?

It is much more complicated than that because part of the BTC will be paid from yen fund and part from BTC fund. And there are both fiat claims and cryptocurrency claims.

The draft document has been made available to creditors but it says not to share with the public. But it does say that BTC and BCH claims will be valued at the BTC/BCH-to-yen conversion rate as of the time of commencement of rehabilitation proceedings (749,318.83 yen/BTC). And the payout will be less than that because the remaining assets will be distributed to creditors in a prorated system (although certain small fiat claims and possibly other claims may have higher priority).

There is definitely not a specific amount of BTC currently that would be paid to creditors per BTC that they held, since it depends on the final total claims (which is mostly finalized but may still change a bit), and presumably on the value of the remaining BTC/BCH assets held by the trustee at the time of distribution.

One creditor made a calculator to compute the payout based on the current exchange rates and such: https://old.reddit.com/r/mtgoxinsolvency/comments/l08ymh/mt_...

Yes.

That is not at all my understanding of what the draft rehabilitation plan says. There are fiat assets and fiat claims and other complicated factors. The payout would depend on the BTC/BCH-to-yen conversion rate at the time that the distribution begins, and the total claims that make it through all the way to the end. Based on one creditor's read of the plan, along with the current exchange rates and such, the current expected payout is closer to 0.16 BTC per 1 BTC held, some of which is paid back in Japanese yen and some as BTC/BCH [https://old.reddit.com/r/mtgoxinsolvency/comments/l08ymh/mt_...].

Same. I remember receiving letters in Japanese at the time of the bankruptcy. I put them on my refrigerator for guests to see because I thought they were amusing. Now it's just depressing to think about.

There's also this entertaining presentation from an outside researcher (tracing down the missing money) from 3 years ago (I don't know what's up with the framerate, but really, it's worth watching): https://www.youtube.com/watch?v=l70iRcSxqzo It's quite a rollercoaster of failures.

The outside researcher, Kim Nilsson, wrote a recent summary[1] in response to articles attempting to whitewash CoinLab's involvement in the case.

[1] https://blog.wizsec.jp/2021/01/earlier-mtgox-payouts-coinlab...

Since we're on the subject, how do people think the Tether situation will play out?

That's a very different subject, I don't see any overlap

Mt Gox was responsible for the first bitcoin bubble. Tether has been responsible for multiple bitcoin bubbles now, using their crypto that was supposedly backed by the USD 1 to 1. The rationale for pumping bitcoin is the same: to recoup stolen money.

Look at the money inflow graph. Tether surpasses everything else

https://coinlib.io/coin/BTC/Bitcoin

There have been many bubbles before Mt Gox and there have been many after.

> Tether has been responsible for multiple bitcoin bubbles now

No one in the space actually believes this.

> There have been many bubbles before Mt Gox and there have been many after.

Before Mt Gox there were no giant bubbles. Post Mt Gox, all of the giant bubbles were most likely caused by Tether.

> No one in the space actually believes this.

That is not true.

In terms of losses, Tether will be to Mt. Gox what Little Boy was to a firecracker.

Any other predictions?

Surprisingly, there still are very few people who are away of this ticking time bomb.

It won't. People were screaming about Tether back in 2017, 4 years, still going strong. Keep in mind, they aren't the only stablecoin in the market now, so even less relevant to the crypto space.

Some agency orders a freeze on Tether which triggers a panic of USDT -> BTC -> USD trades, creating a situation where 1 BTC = ~200K USDT and 1 BTC = ~20K USD. I don't expect this to happen in 2021.

That's already happened, and has been continuously occurring since 2017 when Wells Fargo shut down their links to the traditional banking system. Tether continues to trade at the peg because people believe it to be pegged.

The only way the Tether peg could possibly be realistic is if massive amounts of institutional investors were engaging in really unusual settlement procedures to buy into Tether. I've heard stories about Tether having it's investors operate accounts on it's behalf or something, which sounds incredibly farfetched compared to the more likely idea that they're just not bothering maintaining anything close to a reasonable reserve requirement for their peg. After all, nobody can really pull money out of Tether.

The problem with trying to suggest that Bitcoin is a fundamentally flawed idea is that you will be down voted to oblivion.

As a computer science concept it's rather mundane. We know what merkle trees are.

It's an extremely wasteful form of computing. Mining is an exercise in wastefulness. Proof-of-work is one of the worst concepts I've ever seen.

Ah, Tether.

> As a computer science concept it's rather mundane. We know what merkle trees are.

a practical, robust solution to a long-standing computer science problem (byzantine generals) that directly results in an entire new branch of computer science and economic sector is hardly mundane. bitcoin solves previously intractable trustless coordination problems. we are only at the early stages of discovering what it makes possible; you are the newspaper editor laughing at the web in 1996.

This is spaghetti language. What problem does Bitcoin solve? Economic inflation, deflation, hard money, computer science theoreticals.

I'm talking about all proofs btw. So I'd have the same questions about ethereum. This is very flawed computer science.

You ignored the answer to your own question in the comment you were responding to. The problem is byzantine generals problem. In application to finance it is about trusting your bank and central bank.

I've never seen self propagating transaction networks that pay for themselves and recruit their own evangelists before bitcoin.

Seems pretty amazing.

It's called religion. They just separated the transacting (tithing, etc) from the self propagating evangelism. The tithing was the important part, though.

That's a pretty unique take! I like it

that has nothing to do with this article, I’m sure there will be plenty of other bitcoin articles less tangentially related to your copypasta where you’ll be more in context pasting that

> Mining is an exercise in wastefulness

While I don't disagree (I think PoW should be carbon-taxed or fully outlawed), a massive portion of the non-crypto economy is intentional waste for social signaling purposes: https://en.wikipedia.org/wiki/Veblen_good

It's hilarious that this comment is right below https://news.ycombinator.com/item?id=26043119, which is whining about HN being too anti-cryptocurrency, both being similarly downvoted.

Reply on news.ycombinator.com