Tokyo Police will investigate Mt. Gox and the loss of 850 000 bitcoins

Journalist:
July 30, 2014

I have, like many others, written extensively about the Mt Gox debacle and the missing bitcoins. Too many questions lie unanswered and seem to be  most likely to remain unanswered. Jonathan Keane, writing today on VPN Creative has stated that:

Tokyo Metropolitan Police have finally launched an official investigation into the collapse of Mt Gox and the question of the missing bitcoins, abet, several months after the event.

Mark Karpeles, the CEO of Mt. Gox, has claimed that a series of alleged hacking attacks led to the Bitcoin exchange, once the World’s biggest, losing an alleged 850,000 bitcoins with a value of around half a billion US dollars. A quantity was later ‘found’ in cold storage disks. According to the Wall Street Journal, the police suspect that 27,000 of these coins were illegally removed from Mt. Gox’s systems.  Mark Karpelès stated in March that Mt. Gox had submitted documents to police requesting that the matter of the ‘disappeared’ bitcoins be investigated as a criminal act.

“We decided to launch an investigation as we concluded this case could be connected to criminal activity,” a spokesman for the Tokyo Metropolitan Police department said.

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Last week a creditors meeting for Mt Gox met with Karpeles in Tokyo, but other than demanding that their payments be received in bitcoins, came to very little little resolution as to how the vast quantities of bitcoins went missing and how the matter should be addressed going forward. Toshiya Takahashi stated:

The [creditors] meeting was designed to discuss the bankruptcy process itself and they separated that from what happened to the bitcoins. What people wanted to know was what happened and why.

“I felt that they didn’t give out the answers they should have done,” claimed another unknown investor.

It remains somewhat unclear the shape and form that the police investigation will take but Mt. Gox’s court appointed trustee stated that it will most likely take “a considerable amount of time”.

Mt. Gox’s CEO Mark Karpeles blamed the Mt Gox collapse on a “weakness in our system”, but predicted that Bitcoin would continue to grow.

“First of all, I’m very sorry,” he said. “The Bitcoin industry is healthy and it is growing. It will continue, and reducing the impact is the most important point.”

The Mt. Gox exchange was used overwhelmingly by foreigners, lost 750,000 of its users’ bitcoins and 100,000 of its own. This represented about 7 percent of the estimated global total of bitcoins. People have been asking questions and openly disputing the Mt Gox version of events. They want to know the answers to a number of questions:

  1. What exactly was happening?
  2. Where did the missing bitcoins go?
  3. Can they ever be recovered?

If the Tokyo police complete a criminal investigation into the 27,000 stolen bitcoins, they will have merely scratched what may well prove to be a very deep sore. 27,000 is small potatoes in the Mt Gox scheme of things. The fact that it took Mt Gox potentially years to realize that 744,408 bitcoins had been wiped is frankly unbelievable.

We’re still waiting for the answers Mark…

PJ Delaney @P.J. Delaney@delboyir

Masters in Public Administration, Bachelors in Mgt., I live in Ireland, I have a bit of a background in Economics and lots of opinions on everything else.