Police blame fraud for most of Mt. Gox's missing bitcoins

Japanese police believe only 1% of some 650,000 bitcoins was taken by hackers, according to the Yomiuri Shimbun newspaper

bitcoinage
Credit: Antana

Nearly all of the roughly US$370 million in bitcoin that disappeared in the February 2014 collapse of Mt. Gox probably vanished due to fraudulent transactions, with only 1 percent taken by hackers, according to a report in Japan's Yomiuri Shimbun newspaper, citing sources close to a Tokyo police probe.

Of the 650,000 bitcoins unaccounted for -- worth about US$208 million today -- only about 7,000 appear to have been purloined by hackers, the newspaper reported on New Year's Day, adding that investigators have yet to identify who was responsible.

That conflicts with the explanation by Mt. Gox, which blamed a bug in the Bitcoin system when it filed for bankruptcy on Feb. 28.

"We believe that there is a high probability that these bitcoins were stolen as a result of an abuse of this bug," Mt. Gox said in a statement on its website that day, which suggested "a variety of causes including hacking by third parties."

"There's not much I can say at this point, except the fact that I will continue investigating in order to find what really happened," former Mt. Gox CEO Mark Karpeles said via email on Thursday. While Mt. Gox is being liquidated under the direction of a trustee, Karpeles is still CEO of parent company Tibanne, a small IT firm based in Tokyo.

In an interview with IDG News Service in November, Karpeles said security at Mt. Gox was not what it should have been. In 2013, the startup began taking in millions of dollars worth of bitcoin and tens of thousands of new customers per month, peaking at about 1.2 million customers in total.

The disclosure follows months of investigations by police and others into the tangled mess surrounding the disappearance of the 650,000 bitcoins.

Police investigators analyzed Internet connection records for various transactions on the exchange. It found that bitcoins were being pooled by unknown parties and the pools did not correlate to customer accounts, according to the Yomiuri newspaper.

In November, Bitcoin exchange Kraken was enlisted to help investigate the missing bitcoins as part of the liquidation of Mt. Gox.

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