Ask HN: Where are the 750k Bitcoins lost by Mt. Gox?

I followed the 500,000 BTC for a bit beginning at https://blockchain.info/tx/b269bf1b82dae8a61f7f91dbf7a9d807e....

The coins move around and small amounts are sent away, but the majority ends up back in Mt. Gox's main (hot) wallet. This repeats a few times until the majority is paid back to the main Mt.Gox address.

Here is the transaction where it starts to get interesting:

https://blockchain.info/tx/478ea915aa3a2e54503c43e1c5659722b...

What's left of the 500,000 (429.9k) is split into roughly half and sent to 2 new address. And then each of those address splits the coins in half and sends to two new address.

The end result is that the 429k was split again and again until the funds are split into many addresses, each of which now contain less than 1,000 BTC each. I stopped following the transactions there.

Why take 429k and split it into many addresses each containing less than 1,000 BTC each?

I'd like to see someone trace all of these coins and see if they end up coming together somewhere or show a pattern.

After finding a stolen bitcoin, unravelling its history back to the Mt. Gox Heist is likely to meet a wall of resistence - e.g. if it passed through Silk Road the parties on both sides will be reluctant to come forward and provide information.

In terms of a tort, is it civil or criminal? Was the loss of the coins by Mt. Gox simply an unsatisfactory business transaction? Supposing there was a theft, how should the bitcoins be valued? By the amount of storage space they consume, by the cost of the resources required to create them? If by some market price, which one - some average at the time of their creation, at the time of their loss, at the time of their recovery, or at the time of the prosecution? Many of those values are zero.

Finally, how many of Mt. Gox's customers are going to come forward and claim ownership if such claims are accompanied by a risk of being asked "And how came you to acquire these bitcoins?"

Unlike fiat currency, no government has an interest in supporting the agreed upon fiction that bitcoins are not a fiction. Stealing cash is a crime because the government has an interest in cash being an asset.

The problem with cryptocurrency is the proportion of black and grey market interests it attracts. With bitcoin, they were there first and good citizens second. Separating good citizens from their money was always going to be an attractive option, probably more attractive than separating participants in the black and grey markets from theirs given the greater potential for more serious reprisals which might accompany theft.

It's been over since the first Bitcoin story on NPR.

"MtGox still has at least 200k BTC"

Here are the possibilities, as far as I can tell:

1) That information is inaccurate.

2) MtGox lost their private keys.

3) The private keys were kept in a bank vault, which was seized by a foreign entity like the US government at some earlier time.

4) MtGox stole the coins.

The management of MtGox knows which of these is correct, but they probably aren't going to say.

The BTC lost/stolen are all available within blockchain/public ledger. Depending on who stole them, it would probably be distributed within multiple very smaller transaction.

It my be traceable, but likely unrecoverable, because this is a feature of Bitcoin. In other words authorities and forensic enthusiasts can find the BTC but they are most likely lost at the same time.

1. They weren't stolen - lost in cold storage harddisk failure for example

2. Revealing it would show something extremely embarrassing - they only used a single wallet?

3. They still have them - yay?

4. They were stolen by Mt. Gox - gulp

Feds sized silk road and the Bitcoin wallets

If any was stored or transacted at MTGox this might be some of the amount of losses MTGOX is now showing but NOT ALL OF The lOSSeS obviously

I'm guessing many of these coins were mined or bought before the astronomical price rises.

Of course I understand that that is irrelevant to people who have perceived millions of USD, but interesting nevertheless.

http://www.doctrackr.com/blog/bid/376566/409-Million-in-Bitc...

"The Pony botnet attack was an ambitious data collection program. TrustWave reported staggering data loss statistics from the event the following sensitive information was stolen.

1,580,000 website login credentials 320,000 email account credentials 41,000 FTP account credentials 3,000 Remote Desktop credentials 3,000 Secure Shell account credentials Pony’s attack on the Bitcoin community took down the worlds largest Bitcoin exchange, and caused the price of Bitcoin to plummet. The attack reinforced security concerns over the currency. Can confidence in Bitcoin recover?"

Assuming they weren't lost because someone forgot a password, all of the BTC lost / stolen in transaction malleability are traceable. Whether or not its feasible to check every transaction from Gox over the last few years and add up all the partial BTC is something I can't comment on.

1. Split the wallet up into as many wallets as possible. Preferably by transferring them through a couple hundred compromised (but not emptied) accounts.

2. Sell each individual wallet of say, 100-1000 BTC, on the black market. Make sure the transaction happens outside the transaction chain (i.e. either in real life or using other wallets with some kind of alternative trust system).

3. Be prepared to lose 5-20% of the value, in exchange for turning the money "white".

If the money was stolen and the people who took it aren't stupid, I don't see how someone is ever going to find it.

Again, I know very, very little about bitcoin or economics in general.

I don't know if it's possible to identify (from the blockchain) transactions that have been altered in a way that exploits the malleability issue but it should certainly be possible to identify pairs of transactions with identical startpoints, endpoints and sizes (i.e. number of bitcoins).

If it turned out that pairs of such transactions turned out to come from MtGox's wallets to third-party wallets, that would probably be a good starting point.

-The government has no inclination to interfere (even though many US citizens lost their money) as they were against it (if not outright criminalizing it).

- The lost money, even if recovered in full, would not be the same. The time lost is money lost. Besides the emotional shock and pain people had to take.

- Someone somewhere is sitting on that money, and it will have value, because people won't stop trading Bitcoin even now.

I know people are not ready to take any criticism of bitcoin, but here it is, what needs to be fixed about it.

http://www.reddit.com/r/BitcoinMarkets/comments/1z2xo5/specu...

Instead Bitcoin is a ledger that details wallets and accounts. The origin of balances came from mining, and then people made transactions that, on the official ledger, transferred some or all of those amounts to other wallets. And on, and on, and on.

Hypothetically, if the community were foolhardy enough to trust someone's list of "recipients of mislaid money" wallet ids, you could blacklist those wallets, or even, through group agreement, force transfers back. But that's where tumblers come in: Tumblers are group wallets that take transactions in from all sorts, and then distribute them anonymously to new wallets you control (after a service fee, of course). Anyone hiding their tracks will of course have used a tumbler, often anonymously run on the Tor network. Do you blacklist or reclaim from every wallet that took an output from a tumbler?

Bitcoin would be toast. Tumblers are something that legitimate users of the currency make use of. You won't get the cooperation of tumbler operators because they are themselves engaged in a very serious crime.

So the trace-ability claim repeatedly being made just doesn't hold when you have legitimate and illegitimate transactions by the millions all intermixed. When bitcoins are transferred...game over. Give up on that thought.

Edit: Not "does it matter that they are lost", but rather "since they are lost, does it matter where they are".