Online sleuthing by Mt. Gox dispossessed throws up few clues

Wed Mar 5, 2014 4:03pm EST
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By Jeremy Wagstaff

SINGAPORE (Reuters) - Some of those who have lost bitcoins in the collapse of Mt. Gox have turned to internet sleuthing to find out where their money has gone - but they're unlikely to have much luck.

That's because the crypto-currency is a lot more complex than it looks, even to those who believed in it enough to invest their savings, bitcoin experts say, illustrating the scale of the challenge facing investigators trying to unravel the multi-million dollar mess at what was once the world's dominant bitcoin exchange.

Forum websites like Reddit and internet relay chatrooms have attracted hordes of users as the Mt. Gox debacle unfolded in recent weeks. But their crowdsourcing investigations have uncovered little in the way of real evidence about what happened.

"The crowdsourcing so far has been a miserable failure," said Emin Gun Sirer of Cornell University, who posted his own analysis challenging several theories about what may have happened at Mt. Gox.

The problem, Gun Sirer and others say, is two-fold: users of such forums are not always methodical or disciplined in their research on one hand, and on the other, bitcoin's combination of transparency and complexity invites the unwary to draw false conclusions.

Mark Karpeles, the 28-year-old French CEO of Tokyo-based bitcoin exchange Mt. Gox, filed for bankruptcy on Friday admitting that some 850,000 bitcoins - worth more than $560 million at today's prices, and about 7 percent of all bitcoins minted - were missing. Karpeles blamed hackers for the theft, based on a so-called "malleability" bug in bitcoin software.


The collapse of Mt. Gox has left thousands of bitcoin users bereft. Driven in part by a desire to find the missing bitcoins, and in the absence of any solid explanation by Mt. Gox or Karpeles, Reddit users and others have shared links, studied bitcoin transactions and traded rumors online.   Continued...

Kolin Burges, a self-styled cryptocurrency trader and former software engineer who came from London, holds a placard to protest against Mt. Gox, in front of the building where the digital marketplace operator is housed in Tokyo February 25, 2014. REUTERS/Toru Hanai