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Author Topic: Bitcoin in BIG trouble  (Read 1509 times)
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Getbig III
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« on: February 11, 2014, 01:30:51 PM »

First Mt. Gox suspended, now a second exchange Bitstamp is being attacked by bots and is not currently transacting. There are only a few major exchange sites to begin with.

So all those that say the BTC blockchain itself is uncrackable and safe, fine...but if you can't exchange it for money we use now this thing will shrivel up and die as people get nervous and continue to cash out at $600...$500.....$400...$300...etc. A handful of people made a lot of money off this thing. I guarantee they took it off the table and are keeping their windfall in dollars or gold.

http://www.zerohedge.com/news/2014-02-11/another-bitcoin-flash-crash-imminent-second-major-exchange-follows-mtgox-suspending-
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« Reply #1 on: February 12, 2014, 02:21:37 PM »

First Mt. Gox suspended, now a second exchange Bitstamp is being attacked by bots and is not currently transacting. There are only a few major exchange sites to begin with.

So all those that say the BTC blockchain itself is uncrackable and safe, fine...but if you can't exchange it for money we use now this thing will shrivel up and die as people get nervous and continue to cash out at $600...$500.....$400...$300...etc. A handful of people made a lot of money off this thing. I guarantee they took it off the table and are keeping their windfall in dollars or gold.

http://www.zerohedge.com/news/2014-02-11/another-bitcoin-flash-crash-imminent-second-major-exchange-follows-mtgox-suspending-

Millions have been plundered in bit coin stolen from numerous exchanges, AND more than a few countries have blocked exchange of their currency for bit coin. If that were not enough, the fundamental structure of redemption has to be altered. People can't continue downloading the history of every bitcoin transaction,
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« Reply #2 on: March 03, 2014, 01:47:45 AM »

They have now filed for bankruptcy protection.

Seems the assets amount to significantly less than the liabilities, and they're seeking protection from creditors

Who are these creditors? They are the holders of millions, if not billions of dollars in Bitcoin.

Got Bitcoin? ...not anymore you don't!  Tongue

Sadly, anyone thinking their transactions in the virtual crypto currency were private & untraceable was simply fooling themselves. Expect to see that information gone over with a fine tooth comb.
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« Reply #3 on: March 03, 2014, 02:36:31 PM »

Mt. Gox bitcoin debacle: huge heist or sloppy glitch?
BY JEREMY WAGSTAFF
SINGAPORE Fri Feb 28, 2014 9:10am EST

(Reuters) - Close to half a billion dollars worth of the bitcoin virtual currency has gone missing from an exchange in Tokyo - in what is either the bank heist of the century or a sloppy glitch, or a combination of the two.

Mark Karpeles, the 28-year-old French CEO of Mt. Gox, which once handled around 80 percent of the world's bitcoin trades, filed for bankruptcy at a Tokyo District Court late on Friday. His lawyer said that nearly all the bitcoins in the exchange's possession - 850,000 of them - were missing. Karpeles blamed hackers.

At current bitcoin rates on other exchanges, that would mean $473 million is lost - around 7 percent of all bitcoins minted.

"If the theft is true," said Campbell Harvey, a professor at Duke University's Fuqua School of Business, "it's the biggest bank heist in history," aside from when Saddam Hussein ordered his son to withdraw $1 billion from Iraq's central bank in 2003.

How this happened remains a mystery. But most observers say Mt. Gox's laxness played a key role in the debacle.

"When I first signed up to it, it was clearly not fit to be a financial services company," said Jon Rushman, who researches and lectures about bitcoin at England's University of Warwick. But things got better, he said: "It has been a process of learn-by-doing that they have discovered all sorts of things they should be doing, but were not."

No official explanation has been forthcoming beyond blaming hackers and weaknesses in Mt. Gox's system.

A document circulating on the internet that purports to be a crisis strategy paper prepared on behalf of Mt. Gox blamed the hole on a "malleability-related theft which went unnoticed for several years." Mt. Gox has not confirmed the authenticity of the document.

The phrase, says Ethan Heilman, a research fellow at Boston University, refers to a bug in the bitcoin process whereby someone could trick Mt. Gox into thinking a transaction had failed - and therefore keep repeating it.

This, say Heilman and others, could explain the disappearance of the money - even though the bug has been known for a while, and has been fixed on other exchanges.

STRETCHING CREDIBILITY

More problematic is another part of the document's purported explanation.

Usually bitcoins' private keys - something similar to a personal bank PIN code - are stored offline, where hackers can't get them. This 'cold storage' is unconnected to the online part - the hot wallet. The document says "the cold storage has been wiped out due to a leak in the hot wallet" - a statement experts say doesn't make sense.

If true, this suggests the vast majority of Mt. Gox's bitcoin deposits were leaking out without anyone noticing.

This stretches credibility, says Anthony Hope, who heads compliance for Hong Kong-based bitcoin company MatrixVision. Once Mt. Gox was aware of the malleability bug, why didn't they check their cold storage? "This is like someone saying that you put your wine in a cellar to keep cool, then someone tells you that a particular vintage had loose corks," he said. "You'd presumably go into the cellar to ensure your bottles were not affected."

At Singapore-based Coin Of Sale, Tomas Forgac said: "If this was long-term leakage which went unnoticed, it shows an unbelievable level of incompetence."

'THOUSANDS OF SOCKS'

If the bitcoins have been stolen, the thief or thieves would have several options to convert them into cash, said Boston University's Heilman.

They could have used a "mixing service" to mix one group of funds with those of other people. They could also have used a service like localbitcoins.com to trade bitcoins for cash in person. "There are many possibilities for cashing out, although fencing this many bitcoins would be difficult," he said.

To do that, says Charles McFarland, a research engineer at online security company McAfee, the thief or thieves would have to conceal their tracks by spreading the bitcoin around prior to laundering it into cash.

Trying to do so from a single bitcoin wallet would have been like stuffing thousands of socks in a dryer while everyone else is throwing in only a single pair.

"For this reason it's a safe bet to say the stolen bitcoins are most likely paid out in numerous wallets so each transaction can hide among the trees," McFarland said. That, he said, would make it "expensive, if not impossible, to track."

Knowing whether this was theft or negligence, or both, will take time, and may never happen. U.S. federal prosecutors have subpoenaed Mt. Gox - and other bitcoin businesses - to seek information on a spate of disruptive cyber attacks.

But bitcoin is an unregulated industry, requires no technical audits or risk management procedures - and offers few ways of prosecuting those who might have acted illegally, says Zennon Kapron, who runs a finance consultancy in Shanghai.

"The unfortunate part is that we may never know exactly how this happened," he says.

http://www.reuters.com/article/2014/02/28/us-bitcoin-mtgox-heist-idUSBREA1R0Y720140228



I don't want to say I told ya so, but...
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« Reply #4 on: March 03, 2014, 02:37:30 PM »

Mt. Gox files for bankruptcy, hit with lawsuit
BY YOSHIFUMI TAKEMOTO AND SOPHIE KNIGHT
TOKYO Fri Feb 28, 2014 2:30pm EST

(Reuters) - Mt. Gox, once the world's biggest bitcoin exchange, filed for bankruptcy protection in Japan on Friday, saying it may have lost nearly half a billion dollars worth of the virtual coins due to hacking into its faulty computer system.

The collapse caps a tumultuous few weeks in which the company has remained virtually silent after halting trades of the crypto-currency, shaking the nascent but burgeoning bitcoin community.

Wearing a suit instead of his customary T-shirt, Mt. Gox's French CEO Mark Karpeles bowed in contrition and apologized in Japanese at a news conference at the Tokyo District Court, blaming his firm's collapse on a "weakness in our system", but predicting 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."

Angry investors have been seeking answers for what happened to their holdings of cash and bitcoins on the unregulated Tokyo-based exchange.

Gregory Greene, who estimated his bitcoin stake at $25,000, filed a lawsuit in the U.S. District Court in Chicago late on Thursday, saying Mt. Gox had failed "to provide its users with the level of security protection for which they paid.

Baker & McKenzie, a Chicago-based law firm that represents Mt. Gox, declined to comment. It is not yet clear if the firm is representing the exchange in this lawsuit....

Read more at : http://www.reuters.com/article/2014/02/28/us-bitcoin-mtgox-bankruptcy-idUSBREA1R0FX20140228
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« Reply #5 on: March 04, 2014, 12:08:57 AM »

W. C. Fields:

"You can't cheat an honest man; never give a sucker an even break, or smarten up a chump."

The issuing of currency is the purview of sovereign nations.



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« Reply #6 on: March 19, 2014, 11:13:17 AM »

Buffett says it's a joke, and I'm inclined to agree. Even Fortress lost money on it.

Of course I'm sure at least one or 2 getbiggers who claim Buffett is a crappy investor who knows shit will claim they've been buying it at the bottoms and selling and shorting it at the tops and are making billions off it.  Roll Eyes

It's too volatile and unregulated to be suitable for currency, and there's the problem of valuation as far as using it as an investment vehicle. Either stay clear or use it purely as a speculative play with a very minimal portion of your portfolio if you're a real gunslinger.

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« Reply #7 on: March 19, 2014, 12:26:51 PM »

Buffett says it's a joke, and I'm inclined to agree. Even Fortress lost money on it.

Of course I'm sure at least one or 2 getbiggers who claim Buffett is a crappy investor who knows shit will claim they've been buying it at the bottoms and selling and shorting it at the tops and are making billions off it.  Roll Eyes

It's too volatile and unregulated to be suitable for currency, and there's the problem of valuation as far as using it as an investment vehicle. Either stay clear or use it purely as a speculative play with a very minimal portion of your portfolio if you're a real gunslinger.


Completely Agree. I've stayed far away from BitCoin. Don't trust it, wouldn't use it.
In my opinion it's volatile, insecure, lacks integrity.
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