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Falkvinge/Infopolicy on Mt.Gox: he's not impressed

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  Falkvinge/Infopolicy on Mt.Gox: he's not impressed RS Wood  <rswood@therandymon.com> - 2014-02-28 10:18 +0000

#1086 — Falkvinge/Infopolicy on Mt.Gox: he's not impressed

From the "must've invested in pork bellies" department:
Title: Gox Goes Belly-up After Losing A Billion Dollars Without Noticing; Blames Fault In Corporate Bookkeeping Protocols
Author: Rick Falkvinge
Date: Tue, 25 Feb 2014 09:59:44 -0500
Link: http://feeds.falkvinge.net/~r/Falkvinge-on-Infopolicy/~3/P1Az33oRTuQ/

[image 1]

Cryptocurrency: So it’s more or less official: MtGox, once the world’s
largest bitcoin exchange, has died and taken all its holdings with it to the
grave. This follows a long string of evasive statements, silence, and strange
behavior from the exchange, particularly including bad customer service. The
net is full of horror stories of people having lost their money, and claims
of a “hack against the vault” are not credible in the slightest – here’s why.

In a chaotic situation like this, it’s hard to know exactly what is true.
Here are the claims that seem reasonably factish:

* The vault of Gox is empty, instead of containing 744,000 bitcoin
* Gox has halted all trading, deleted all previous communication, and is
serving a blank web page
* The blank web page holds an invisible comment hinting at an acquisition
* There are claims that the loss of 744,000 bitcoin was due to a
years-running hack that gradually emptied the vault
* Claims that the loss is due to a “hack” appear not credible
* Previous large “hacks” in the bitcoin ecosystem have been widely believed
to be outright scams, but haven’t met the evidence bar for a criminal
trial

In persistent rumors of insolvency, “MT Gox” has been pronounced “Empty Gox”
for some time in mockery. As it turns out, it’s more true than expected. News
this morning says that 744,000 bitcoins are missing from its “cold storage”,
its vault. What appears to be a consultant’s crisis report and findings[2]
doesn’t list a cold storage wallet at all among assets, indicating the
exchange’s vault is empty.

How much is 744,000 bitcoin? In technical terms, it’s a shitload of money.
Using the peak exchange rate from two months ago, it’s a hairsbreadth shy of
one billion US dollars, with a B.

So the question is; how can you not notice one billion dollars gradually
disappearing from your company over several years, as has been claimed to be
the case?

The answer is simple: you can’t. It’s practically against the laws of physics
to not notice this. You can’t close the ledgers on a fiscal year without
every cent accounted for. There would be a faint theoretical possibility it
could have taken place entirely within a fiscal year, but even that is
improbable to the level of the moon being made of cheese.

Any CEO of a company this size has screens in their office showing real-time
key numbers, specifically including financial flows and balances. Frak, I’ve
been running a non-profit organization that made it to the European
Parliament, and I had a real-time view of every single cent of the
organization’s assets, using our homebuilt software Swarmops.

[image 3]

Balance sheet, motherfucker. Do you speak it?

So an obvious conclusion is that the claims of a long-running hack emptying
the vault are false. It’s not just possible to not notice one billion dollars
disappearing. It’s not possible to miss one single dollar disappearing with
normal bookkeeping methods.

Live updates to the situation below, as I get them. Timestamps are European.

[4]

[5]

[6]

[7]

[8]

[9]

[10]

[11]

[2]

[12]


[13]

[14]

[image 15]

Links:
[1]: http://falkvinge.net/files/2013/05/facepalm-237x133.png (image)
[2]: http://www.scribd.com/doc/209050732/MtGox-Situation-Crisis-Strategy-Draft (link)
[3]: http://falkvinge.net/files/2014/02/balance-sheet-621px.png (image)
[4]: http://two-bit-idiot.tumblr.com/post/77967162725/breaking-full-mt-gox-story-coming (link)
[5]: http://goxbalance.com/ (link)
[6]: http://jesse.forthewin.com/blog/2014/02/unilateral-statement-regarding-fucked-up-shit-and-the-greater-good.html (link)
[7]: http://www.reddit.com/r/Bitcoin/comments/1yxn7b/interview_of_mark_karpeles/ (link)
[8]: http://www.youtube.com/watch?v=GRIJ_jpmwzo (link)
[9]: http://antonopoulos.com/2014/02/25/statement-on-mt-gox/ (link)
[10]: http://www.foxbusiness.com/markets/2014/02/25/mt-gox-ceo-says-on-internet-chat-hasnt-given-up/ (link)
[11]: http://www.domaininvesting.com/andy-booth-sells-gox-com/ (link)
[12]: http://twitter.com/mmeijeri/status/438251493314269186 (link)
[13]: http://falkvinge.net/2014/02/10/placing-your-crypto-wealth-in-cold-storage-installing-armory-on-ubuntu/ (link)
[14]: http://falkvinge.net/2014/02/11/the-embarrassing-fact-mtgox-left-out-of-their-press-release/ (link)
[15]: http://feeds.feedburner.com/~r/Falkvinge-on-Infopolicy/~4/P1Az33oRTuQ (image)

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