US to Cooperate with Japan in Mt Gox Investigation

japanese americanPretty much everyone observing the Bitcoin space, whether a participant or a critic, is wondering what happened in the alleged Mt Gox hack. After months of silence from the US and Japanese authorities over that most thorny part of the Mt Gox saga, official cooperation has finally been sought from the Japanese authorities based on a bilateral treaty on mutual legal assistance in crime matters. The alleged hack of several hundred thousand bitcoins had previously been ignored in bankruptcy proceedings, much to the ire of Gox creditors.

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The Path To Justice

The request seems to have been made shortly after the Tokyo Metropolitan Police Department announced that it was officially investigating 27,000 bitcoins out of the unaccounted 650,000 bitcoins. No further details seem to have been provided, but it is most likely that the Japanese authorities have sufficient evidence to pursue the 27k btc, while currently lacking such evidence for the remaining 623k btc.

Creditors now hope that this new cooperation in investigating MT Gox will shed more light on what happened, as the Japan Times details:

“As Internet Protocol addresses in the United States were used to illegally access the Mt. Gox system, the Japanese side is expected to seek bilateral cooperation to help identify where this access originated.

The American side is likely to seek such information as computer logs voluntarily submitted by Mt. Gox to the [Tokyo Metropolitan Police Department], statements made by Mt. Gox CEO Mark Karpeles in voluntary questioning with the police, and the whereabouts of certain parties...”

The official announcements seem to follow heavy criticism of the law enforcement authorities by the MT Gox creditors due to perceived inaction, which culminated with the Creditor’s Meeting on July 23rd 2014 when most creditors expressed extreme displeasure at the lack of information and with the pace of the investigations.

Although the new cooperation is a welcomed step, there remains no public plea for information, no known request for assistance from the Bitcoin community nor any formal questioning of any MT Gox employer or employee.

The seemingly highly incompetent handling of the MT Gox saga by the law enforcement authorities has created a vacuum whereby members of the Bitcoin community have taken it upon themselves to investigate, leading to rumors of corruption at the highest levels of the Bitcoin community, of death threats, and of disappearances.

The latest such rumor began with an anonymous poster on Reddit, who claimed to have damning evidence of manipulation of the MT Gox price with Mark Karpeles, the MT Gox CEO, consent. This evidence was never published, but it seems that it was passed on to a journalist who, quite puzzlingly, began to make demands from certain Bitcoin figures and threatened with publishing the information if the demands were not met.

This episode echoes the astonishing declaration of war by Two Bit Idiot in March 2014 who quite similarly claimed to have damning evidence, but following numerous demands and threats, never published the documents, nor quite revealed the damning aspect of his allegations, stating that he had to look after his financial well being.

The journalist however went on to make a shocking allegation. He claimed that there was a bot, dubbed Willy the Bot, who manipulated the Bitcoin price at Mt Gox, and went on to allege that the bot was owned by certain members of the Bitcoin community who he named. Nothing was heard further from him.

Mt Gox sources claim that certain persons unknown manipulated the Mt Gox database and the price so as to profit through arbitrage on other Bitcoin exchanges. Therefore, some of the claims seem to be substantiated, but the identities and the precise details remain unsubstantiated allegations.

The lack of any concrete information since a large missing sum of 200k bitcoins was exposed almost seven months ago illustrates the limits of investigative capabilities of individuals without the official authority to question under caution. All attention is, therefore, now firmly turned on pressuring the authorities to allocate more resources to investigate this theft, fraud or what might be a more horrific crime, whose perceived lack of resources and snail speed approach has revealed a gap in the market for private investigators with full official authority. Hopefully the authorities will enlist the help of recognized Bitcoin experts in their hunt for justice.

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Andrew Quentson

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