Protest at MtGox, Tokyo, 14th February 2014

Protest at MtGox, Tokyo, 14th February 2014

By now many of you must have heard of the demise of the Mtgox BitCoin exchange.

This exchange was the biggest BitCoin exchange until a few months back. Was not known by many including myself was that it was being run almost single-handedly by a single person, but Frenchman less. Despite being based in Japan.

 

 

As it was the largest BitCoin exchange at the time, it is quite shocking that this large exchange was being run by a single individual, Mark Karpeles. He took it upon himself to do all backend implementation and security. He was lax in implementing security patches for known system vulnerabilities and had no I.T Security Officer let alone team. All this was hidden from the users by a well presented and very professional user interface as well as the information on how to secure the online wallets using private key s/ public key encryption. What this did was give the MtGox users a false sense of security, and who then left their BitCoins in an online wallet. Mark Karpeles was unable to explain what had happened and where the BitCoins had disappeared to. Later, some 200,000 BitCoins, were miraculously found in an old style wallet (BBC, 2014).

 

 

What is sad about it, is that it does reek of being an inside job. This ‘model’ where transfers stop going through and BitCoins then disappearing mysteriously, followed finally by the company filing for bankruptcy has been done before. Over the last 2-3 years but by smaller exchanges like the (MyBitCoin.com exchange, 2014). After this the clients who had BitCoins are just happy to receive whatever crumbs can be gleaned from the sale of the ‘recovered BitCoins’ . Meanwhile the bulk of the BitCoins disappear forever, untraceable due to BitCoin’s excellence as an crpto-currency.

 

My personal feeling is that Mark Karparales did not take the responsibility of running the largest BitCoin exchange seriously. And as a result either by willful theft or sheer negligence has managed to harm BitCoin users and well as BitCoin. I had a few BitCoins on the MtGox exchange which I was gutted to have stolen. Fortunately, BitCoin has proved by it’s recovery in value that it is a very good cryptocurrency in it’s own right.

 

 

The lesson from this is to do due diligence checks on any exchanges that you are planning to use and not to leave your BitCoins online. Store them in an encrypted offline wallet. I have certainly learnt my lesson.

 

References:

BBC, 2014, ‘200,000 missing BitCoins’

http://www.bbc.co.uk/news/technology-26677291

Link Verified 07/06/2014

Protest at MtGox, Tokyo, 14th February 2014

https://ixquick-proxy.com/do/spg/show_picture.pl?l=english_uk&cat=pics&c=pf&q=MTGox+protest&h=720&w=1280&th=89&tw=160&fn=maxresdefault.jpg&fs=77.7%20k&el=boss_pics_1&tu=http:%2F%2Fts2.mm.bing.net%2Fth%3Fid%3DHN.608048841080180145%26pid%3D15.1%26H%3D89%26W%3D160&rl=NONE&u=https:%2F%2Fwww.youtube.com%2Fwatch%3Fv%3DZddzSC7AuAw&udata=ee03f064edc2239ba4c27395106fc991&rid=NBLOKMLQQLSN&oiu=http:%2F%2Fi1.ytimg.com%2Fvi%2FZddzSC7AuAw%2Fmaxresdefault.jpg

Link Verified 07/06/2014

MyBitCoin.com exchange, 2014

http://buttcoin.org/has-bruce-wagner-pulled-off-the-financial-biggest-scam-on-the-bitcoin-community

Link Verified 07/06/2014