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Mt. Gox

Crisis Strategy document: 744,408 Bitcoins missing

24 Feb, 2014

A document titled “Mt. Gox Crisis Strategy” is released by Bitcoin entrepreneur Ryan Selkis. The document shows that Mt Gox cannot account for over 740,000 Bitcoins (with a value of $350 million):

For several weeks MtGox customers have been affected by bitcoin withdrawal issues that compounded on themselves. Publicly, MtGox declared that “transaction malleability” caused the system to be subject to theft, and that something needed to be done by the core devs to fix it. Gox’s own workaround solution was criticized, and eventually a fix was provided byBlockchain.info.The truth, it turns out, is that the damage had already been done.

At this point 744,408 BTC are missing due to malleability-related theft which went unnoticed for several years.

The cold storage has been wiped out due to a leak in the hotwallet.The reality is that MtGox can go bankrupt at any moment, and certainly deserves to as a company.

The document, prepared by Mt. Gox representatives and employees at global consulting firm Mandalah is confirmed by Karpeles as  “more or less authentic” during an interview the next day with Fox Business.

According to a source, the same junior staffer who published the business plan document also attended an alleged emergency investor meeting just one day after the “Crisis Strategy Draft” was created.  According to that source, it was at this meeting in which Karpeles and colleague Gonzague Gay-Bouchery first outlined the extent of Mt. Gox’s losses.

This meeting triggered a chain reaction of events in which the solicited investors rebuffed Karpeles and his colleagues, demanded they come clean to customers and stakeholders immediately, and then notified other industry executives, including those at the Bitcoin Foundation, of the catastrophic losses at Mt. Gox.  This group of executives promptly reached out to regulatory authorities and began crafting a joint statement condemning Mt. Gox. They also restricted their own employees from buying or selling bitcoin.

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