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One year later, we're no closer to finding MtGox's missing millions

Tim Hornyak | March 5, 2015
As the bitcoin investigation drags on, key people in the probe are keeping mum.

Few people marked the recent anniversary of one of the biggest catastrophes to hit bitcoin -- the day MtGox went bust.

Once the world's biggest market for the digital currency, the Tokyo-based exchange collapsed on Feb. 28, 2014 with liabilities of some ¥6.5 billion ($63.6 million). It said it was unable to account for some 850,000 bitcoins, worth nearly half a billion dollars at the time. It was a staggering sum, possibly purloined by hackers who exploited a bug in the bitcoin system, according to the company.

The size of the supposed heist, and its dollar value, shrank considerably last year. Some 200,000 coins turned up in an old-format bitcoin wallet last March, bringing the tally to 650,000. At the current bitcoin price of $277, which is about half of what it was a year ago, the missing coins are worth about $180 million.

But there's still no explanation of what happened to them, and no clear record of what happened on the exchange. An anonymous report last year by a bitcoin researcher, based on leaked trading logs, chronicles the activities of trading bots that apparently ran amuck in the MtGox system, indicating massive fraudulent trading.

Tokyo-based bitcoin security firm WizSec issued a report last month that supports some of the findings of the anonymous study, concluding that a bot dubbed Willy operated over several trading accounts and was able to trade at times when the exchange was not available to other users. But the WizSec report, which was cautious about not jeopardizing other investigations, said more study of Willy is needed to understand its purpose.

MtGox CEO Mark Karpeles, who bowed in ritual apology during his bankruptcy news conference at the Tokyo Stock Exchange, maintains that online thieves are to blame. He has also hinted that they may have had insider help.

In January, Japan's Yomiuri Shimbun newspaper, citing sources close to a Tokyo police probe of the MtGox collapse, reported that only 7,000 of the coins appear to have been taken by hackers, with the remainder stolen through a series of fraudulent transactions.

Karpeles said he is "mostly kept in the dark" about the ongoing police investigation and couldn't comment on it.

"I really hope we will see some kind of progress -- if possible by catching the hackers and whoever might have been helping them," Karpeles said via email. "This whole thing has been impacting a lot of people, and continuing to impact them for way too long."

Observers had doubted that the Tokyo Metropolitan Police had the resources or know-how to track the coins, and it was not surprising that last November, Bitcoin exchange Kraken was enlisted to help investigate the missing bitcoins as part of the liquidation of MtGox.

 

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