Mt Gox staff tried to warn CEO of Bitcoin loss risks – reports

Fears over 'customer funds covering operating costs' says Reuters


Staff at fallen Bitcoin exchange Mt Gox in Japan have claimed that they raised alarms about how the company was handling client funds as long ago as 2012, according to Reuters.

In this report, the unnamed “current and former employees” of Mt Gox were concerned that “customer funds were diverted to cover operating costs” of the popular website.

These expenses went far beyond the day-to-day running of Mt Gox's offices in a Tokyo tower: they included “high-tech gadgets such as a robot and a 3D printer and a souped-up, racing version of the Honda Civic imported from Britain for [CEO Mark] Karpeles,” the staffers alleged to Reuters.

However, the same sources also noted that Karpeles said customer money was not being used to fund the business, "but [he] declined to provide details on how the business had covered any loss," the newswire reports.

The exchange claimed in 2012 it was handling US$14 million in monthly Bitcoin transactions, which would have been around 90 per cent of Bitcoin trade at the time. In August 2012, to assure traders it was solvent, it claimed on its site that its transaction fees were netting it US$1,500 per day.

In April 2013, Karpeles claimed – again according to Reuters – that it processed US$20 million a day.

As is now well documented, Mt Gox's collapse early this year stung account holders for about US$450 million in losses at today's prices for the crypto-currency. The company has also been unable to account for US$27 million in cash holdings. ®

Similar topics

Broader topics


Other stories you might like

  • Experts: AI should be recognized as inventors in patent law
    Plus: Police release deepfake of murdered teen in cold case, and more

    In-brief Governments around the world should pass intellectual property laws that grant rights to AI systems, two academics at the University of New South Wales in Australia argued.

    Alexandra George, and Toby Walsh, professors of law and AI, respectively, believe failing to recognize machines as inventors could have long-lasting impacts on economies and societies. 

    "If courts and governments decide that AI-made inventions cannot be patented, the implications could be huge," they wrote in a comment article published in Nature. "Funders and businesses would be less incentivized to pursue useful research using AI inventors when a return on their investment could be limited. Society could miss out on the development of worthwhile and life-saving inventions."

    Continue reading
  • Declassified and released: More secret files on US govt's emergency doomsday powers
    Nuke incoming? Quick break out the plans for rationing, censorship, property seizures, and more

    More papers describing the orders and messages the US President can issue in the event of apocalyptic crises, such as a devastating nuclear attack, have been declassified and released for all to see.

    These government files are part of a larger collection of records that discuss the nature, reach, and use of secret Presidential Emergency Action Documents: these are executive orders, announcements, and statements to Congress that are all ready to sign and send out as soon as a doomsday scenario occurs. PEADs are supposed to give America's commander-in-chief immediate extraordinary powers to overcome extraordinary events.

    PEADs have never been declassified or revealed before. They remain hush-hush, and their exact details are not publicly known.

    Continue reading
  • Stolen university credentials up for sale by Russian crooks, FBI warns
    Forget dark-web souks, thousands of these are already being traded on public bazaars

    Russian crooks are selling network credentials and virtual private network access for a "multitude" of US universities and colleges on criminal marketplaces, according to the FBI.

    According to a warning issued on Thursday, these stolen credentials sell for thousands of dollars on both dark web and public internet forums, and could lead to subsequent cyberattacks against individual employees or the schools themselves.

    "The exposure of usernames and passwords can lead to brute force credential stuffing computer network attacks, whereby attackers attempt logins across various internet sites or exploit them for subsequent cyber attacks as criminal actors take advantage of users recycling the same credentials across multiple accounts, internet sites, and services," the Feds' alert [PDF] said.

    Continue reading

Biting the hand that feeds IT © 1998–2022