Comment by sillysaurus3 | Hacker News Reader

Comment by sillysaurus3 | Hacker News Reader

Let me remind everyone that Karpeles is an established liar and a convicted computer fraudster, and will obviously say or do anything at this point to clear his own name.

http://newslines.org/mt-gox/joins-linux-cyberjoueurs/

http://newslines.org/mt-gox/convicted-of-computer-fraud/

Again, what ultimately convinced me of Karpeles' character is that he paid his IRC support staff to lie to users. The support staff didn't realize they were being paid to lie, but they were certainly lies. They were being paid to tell users, "Yes, all of your coins are safe and secure" while Karpeles was drafting his Mt. Gox crisis report: http://www.scribd.com/doc/209050732/MtGox-Situation-Crisis-S...

Once Mt. Gox was hacked in the aftermath, a log of their trading activity was leaked. In that log, there's evidence of an Mt. Gox trading bot that had been operating for a long time, buying up bitcoins in order to inflate the price.

http://willyreport.wordpress.com/2014/05/25/the-willy-report...

https://news.ycombinator.com/item?id=7796748

At this point, I don't think Mt. Gox or Karpeles deserves any further attention, except as a warning that even the largest Bitcoin exchange can fail, which is why you must store your bitcoins in your own secure wallet, not any third party service.

EDIT: Also, Mt. Gox lost at most 386 bitcoins to malleability: https://news.ycombinator.com/item?id=7482451

I understand the anger coming from those who lost sizeable amounts of coins due to MtGox's mistakes, but with an undergoing police investigation, wouldn't the rational attitude here be to wait for the fog of war to clear up and the investigation results to be announced?

Karpeles does not have a serious history of fraud. We don't know yet what happened with MtGox. Wait and see.

> but with an undergoing police investigation

What gave you that idea? There's no police investigation ongoing in Japan, or anywhere else for that matter. Karpeles is looking at Japanese bankruptcy proceedings, he is not facing criminal charges. He was invited to testify in Texas in light of probable criminal wrongdoing, but he turned down the offer. The only major "investigation" of Karpeles is happening on Reddit and HN.

The police investigation is mentioned twice in the interview, i.e. "The police are investigating the case so I won’t be able to say much."

There are various new articles about the Tokyo Metropolitan Police and Mt.gox "working together", but it sounds like you are right that the police are not investigating Karpeles.

No one has heard anything about a police investigation into embezzlement or fraudulent behavior. Karpeles alludes to the police investigating "physical attacks". Surprise surprise, another excuse.

Governments should reserve judgement until a conviction has been secured, but I do not believe that it is reasonable to demand that private individuals do the same. A presumption of innocence is about limiting the circumstances in which governments can restrict the rights of somebody, but it makes little sense outside of courtrooms.

Consider: Richard Nixon was never convicted. Does that mean I can't/shouldn't call him a criminal piece of shit?

What I'm saying is, we don't have hard evidence pro or against Karpeles, what we have is a lot of speculation, typically made by angry people who lost part of their savings (or all of it in the case of Mr. Sillysaurus) in the MtGox collapse. That is not sufficient material to start a mob lynch.

The current investigation will hopefully surface whether the debacle was the result of genuine mistakes on the part of MtGox, or the result of wrongdoings. I'm personally reserving my judgment until we have more trustable information.

I lost all of $0 and 0 BTC in the MtGox fiasco, but this has no bearing on the ethics of Karpeles, and it's quite absurd that there is no ongoing criminal investigation. It's appauling. It's an outrage!

> we don't have hard evidence pro or against Karpeles

There is a lot of hard evidence:

1. 800k+ bitcoin that are gone

2. Public statements by Karpeles that all was ok on numerous occasions

3. Frozen withdrawals for months that hinted at liquidity problems that were denied (which is a crime)

4. A leaked crisis strategy draft, later admitted by Karpeles as a legit internal document, that showed MtGox knew at least a month before d-day that they were in trouble and trading insolvent.

5. The malleability bug excuse used as a cover to liquidity problems

6. Timeline of withdrawal problem suggests earlier knowledge and inaction

What is in doubt is the extent of the coverup, who else was involved and if Karpeles really was behind a plan to ease the liquidity burden by settling his goxbux debt by hyperinflating his remaining bitcoin holding value, and "printing" bitcoin by buying on the market in exchange for GOX USD - which could then be smuggled to another (legit) exchange in return for real USD that could be used to pay back the deflated goxbux.

> paid his irc staff to lie to users

Founders, how do you deal with your support teams when you've understood you'd be going bankrupt?

I'm sure there are plenty of honest people who would do the right thing; but I guess there are other founders who remain stubbornly optimistic until they're way beyond the failure point. At least because entrepreneurship requires a serious optimism disorder ;)

serious optimism disorder

Acronym?

Sod off?

The willy report was quickly debunked as being FUD.

Those bots were just the dark pool bots that larger players paid Mt Gox to buy large amounts of Bitcoin on a drip feed system over time so as not to spook the markets.

> The willy report was quickly debunked as being FUD.

Could you expand on this? I'm really interested.

The sort of bot he's describing would be designed to mask large purchases and prevent them from sucking all liquidity out of the market temporarily or spiking prices.

Let's say I want to buy 500 BTC at $1000 (to make the math easy). I wire Mt Gox half a million bucks, and try to buy up 500 BTC all at once. This moves the market massively because that's a sizable chunk of existing sell orders. To prevent this, I could instead buy a few BTC a minute for the next couple of hours and I wouldn't drastically shock prices or be as notable. Prices would still move upwards (because more demand in the network) but they wouldn't spike. Or Mt Gox could keep a floating reserve, I could pay a free to lock in the price and move the money around internally to Mt Gox, and they replenish that reserve a few BTC at a time (taking on price risk if their reserve is depleted when prices are high, but making profits if they wait to refill that reserve until prices are in a trough).

Note that I have no evidence this is the case, I'm just trying to explain what he claimed was the cause.

This kind of stuff certainly happens in the capital markets.

Bingo. Bang on.

This is exactly what I meant.

I don't remember any 'debunking'. What I remember was some half-assed speculation that maybe possibly it could be that the Willy bot was a dark pool (even though it's not clear this explained all the anomalies with that account).

The 'debunking' was an alternate theory that didn't hold up to real scrutiny.

If the idea was a 'dark pool' to obfuscate their trades, not signal the market, spike the price, or avoid front running - then they failed spectacularly on every account.

the bots made up a large proportion of total value, they traded in a predictable pattern and were spotted quickly within days (and then taken advantage of by other traders), had unlimited buy demand which continued through a 2x+ increase in the btc price - defeating the purpose of spreading the order out.

it also doesn't explain why the bots trades continued while the API was down.

and finally, connecting to a dark pool should still show normal trading patterns, which the bot patterns were completely unlike (hence them being spotted).

Source for the debunking? As far as I know nothing official has been released regarding these allegations and most likely nothing will be confirmed until after the Japanese bankruptcy proceedings.

Could he have been inflating the price to recover the loss from the stolen bitcoins ? This way he could have kept the company a float ...

But he was short N bitcoins. He should have tried to drive the price down so he could rebuy those N bitcoins.

The complete Mt Gox timeline: http://newslines.org/mt-gox/

Wow Newslines is a cool idea, thanks for pointing that out.

It's just another blogspam site. You can get the same thing out of any blogging platform using tags / categories.

Thank you for your critique, but Newslines is not a blogspam site. Our writers create news summaries about any topic that are compiled into sortable timelines. The objective is to give real understanding of how topics and people develop over time, as in the example of Mt Gox, where our timeline of events is the definitive record of news about the exchange. If you can find a site that does the same then please let me know as I am genuinely interested.

I understand the site's goals and I'm not saying it's a bad concept. The reason I called it blogspam is because none of it seems to be original content and citations seem to be optional (example[1]). If every post was a link to the primary source with a summary attached it would be much better. As it stands right now it's WordPress with SEO targeted content taken from other sites, the definition of blogspam.

1: http://newslines.org/mt-gox/joins-linux-cyberjoueurs/

Hi, All our posts should be sourced to the original. I must have missed adding the source to that post. It's there now. Thanks you for pointing that out.

Reply on news.ycombinator.com