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Mt. Gox Receives Subpoena From Federal Prosecutor: Source
- MWil 13y agononpaywall?
- SDGT 13y ago<strike>Seems to be unpaywalled now?</strike> edit sry, heres a screenie: I got some "one time pass" http://imgur.com/6IrmmLo http://imgur.com/6IrmmLo edit: text from article. Sorry I just hit print screen and auto uploaded by reflex. Mt. Gox Receives Subpoena From Federal Prosecutor: Source Bitcoin exchange Mt. Gox has received a subpoena from federal prosecutors in New York, according to a person familiar with the matter, dealing another blow to the embattled marketplace for buyers and sellers of the virtual currency. Mt. Gox, one of the largest bitcoin exchanges, shut down on Tuesday, underscoring the risks of bitcoin, the virtual currency that has seen a meteoric rise in the past year. The subpoena was sent this month and asked Mt. Gox to preserve certain documents among other things, the person said. Write to Christopher M. Matthews at christopher.matthews@wsj.com
- fabulist 13y agoI think you have a subscription then. I'm still hitting the paywall.
- mbreese 13y agoFor the WSJ, just do a Google search for the title or change your referrer to Google.
- deleted 13y ago[deleted]
- nwh 13y agoArticle without the paywall — http://archive.is/JWikk http://archive.is/JWikk
- AngrySkillzz 13y agoIt's pretty embarrassing that you can read most of the article with the paywall intact.
- fabulist 13y agoI was wondering if they were deliberately allowing archive sites past the paywall.
- nwh 13y agoMore likely archive.is is pretending to be Googlebot. The author has a lot of server side tricks, like fake Facebook accounts so that it can archive Facebook pages properly.
- fabulist 13y agoI'm attempting to replicate this. Searching the last sentence (which is behind the paywall) brings it up in google right away, so I think you're right. However, using Googlebot's user agent doesn't work, so it must be slightly more sophisticated. The result in Google is also not-paywalled, though going directly to the link is. So maybe they use a simpler strategy, and just mess with the parameters. This is the result from google: http://online.wsj.com/news/articles/SB10001424052702303880604579405852448992982?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702303880604579405852448992982.html http://online.wsj.com/news/articles/SB1000142405270230388060...
- nwh 13y agoSearching at Google for "cache:http://online.wsj.com/news/articles/SB10001424052702303880604579405852448992982?" gets me the full text article, they could just be stripping the header from the page and displaying that? I know it does detection of cached Google pages in some circumstances.
- MBCook 13y ago
- fabulist 13y agos/underscoring the risks of bitcoin/illustrating the risks of speculating, especially with companies long known to be unreliable/g
- wernerb 13y agohttp://www.businessinsider.com/report-mtgox-subpoenaed-by-us-prosecutor-2014-2#ixzz2uOHMdfy0 http://www.businessinsider.com/report-mtgox-subpoenaed-by-us... is more informative
- kevingadd 13y agoOh, you're right. When that page first went up it was one sentence with a link to the WSJ.
- fnordfnordfnord 13y agoIt's not much of an article as it is only two paragraphs. Get your popcorn ready for when stuff starts hitting PACER/RECAP.
- gojomo 13y agoWouldn't it be funny if malleability has confused MtGox about its own hot->cold->hot wallet transactions, and it really has way more coins than it knows? Then, when MtGox finally has someone with half a clue patch things & rescan, 700K BTC reappear, and they post on their homepage, "Nevvvvvermind – it was all a bad dream."
- MichaelGG 13y agoThat'd be some confusion. They just need to look at their cold wallet addresses to see the balance, right?
- nwh 13y agoOld wallets can be huge, tens of thousands of receiving addresses large. Most aren't even displayed to the client (change addresses).
- gojomo 13y agoAnd maybe if they'd tried to be clever, with custom "high-security" key-generation/key-splitting tricks, but actually wound up being stupid, without good records of public-addresses... then reconstructing the public-addresses for lookup could be just as hard as reconstructing the private-keys. Of course we're in wild-speculation territory but it's an interesting creative extreme-scenario exercise.
- exit 13y agohave you seen the irc chat log with Mark Karpeles? it almost seems possible that that is exactly what has happened: [12:02] <JonWickedFire> How much did you lose yourself? [12:04] <MagicalTux> Well, technically speaking it's not "lost" just yet, just temporarily unavailable [12:05] <JonWickedFire> Well, how much is unavail for you? [12:06] <MagicalTux> I'm not even sure http://www.wickedfire.com/shooting-shit/179038-my-conversation-mark-karpeles-mtgox-2.html#post2164682 http://www.wickedfire.com/shooting-shit/179038-my-conversati...
- 13y ago
- pmorici 13y agoFor anyone thinking, "O good the government is here to investigate and get our money back" I wouldn't get too excited I'd say this is more likely them wanting to investigate Silk Road related Bitcoin activity than any desire to help those screwed by Gox.
- mbreese 13y agoNo... people lost a lot of money, including investors and investment funds located in the US. This is a case of the gov't doing their jobs and likely has nothing to do with Silk Road. It might have something to do with the MtGox funds previously confiscated by DHS(?) though.
- pmorici 13y agoThe previously confiscated funds were directly related to the Silk Road busts. DHS officials inferred as much in their testimony on Bitcoin before congress. http://thegenesisblock.com/mt-gox-seizures-linked-silk-road-fed-testimonies/ http://thegenesisblock.com/mt-gox-seizures-linked-silk-road-... The article implies this wasn't just issued today, it is just being reported now but it says it was actually issued "this month". You know what else happened in that time frame? Charlie Shrem was arrested for Silk Road related Bitcoin charges. I mean It would be great if they were investigating the insolvency but I'd say there is a good chance it isn't related to that.
- mbreese 13y agoI was talking about what was seized from their accounts with Dowalla. Who seized that?
- pmorici 13y agoYes, that is the same as the Dwolla seizure. They had a Wells Fargo Business bank account linked to their Dwolla account. That is the 5 Million that was seized purportedly in connection to the investigation into Silk Road.
- ck2 13y agoNew York wants to be the big dog in regulating crypto-currency, which almost feels like they are protecting and working at the behest of the banking industry headquartered there. But I do not understand how a NY prosecutor can subpoena a Japanese business?
- fiatmoney 13y agoEasy, if they think a NY law has been violated.
- malka 13y agoI'm pretty sure I am currently violating loads of north korean laws. They should subpoena the entiere world.
- glurgh 13y agoIt's a Federal prosecutor who just happens to be located in New York.
- anigbrowl 13y agoIf you're doing business in New York, then you can be sued there. It's called the doctrine of 'minimum contacts.' Of course, they could choose to ignore the subpoenas, but then the NY DA could presume the worst and issue an arrest warrant for anyone connected with the operation, which would make it difficult for them to visit the US.
- ubernostrum 13y agoBut I do not understand how a NY prosecutor can subpoena a Japanese business? If you offer services to, or engage in financial transactions with, a person in Jurisdiction A, Jurisdiction A can enforce its laws on you. You should not in any way be surprised by this fact.
- thirsteh 13y agoThat's all well and good, but Mt. Gox likely won't conduct any more business in NY. It gets even more problematic if they don't actually operate any legal entity in the U.S. The U.S. may enforce its laws upon U.S. entities, but it has no authority to do so on e.g. a Japanese one, unless a treaty/agreement exists that facilitates it. This is why China-only companies that engage in IP theft (or vice versa) aren't being hauled into court on the daily. (You wouldn't be surprised if I said China can't enforce its laws on a NY company, right?)
- pjan 13y agoAlso: Japan authorities looking into closure of Mt. Gox bitcoin exchange http://www.reuters.com/article/2014/02/26/bitcoin-mtgox-japan-idUST9N0LP00020140226 http://www.reuters.com/article/2014/02/26/bitcoin-mtgox-japa...
- yeukhon 13y agoAh. I was sort of right :) https://news.ycombinator.com/item?id=7296597 https://news.ycombinator.com/item?id=7296597 Though not FBI, this is interesting.
- snizzysnaps 13y agoThe founders of Mt Gox should get Freedom Medals for bringing Bitcoin, and its community, to their knees. Bitcoin users are a bunch of intellectual property thieves, child pornographers, and drug users. The sooner this currency is destroyed, and its user-base imprisoned the better we will all be.
- appleflaxen 13y agoWhere were these zealous prosecutors during the global financial meltdown in 2008? It would be nice if people went to jail for fraudelently representing mortgages. I'm fine with Gox getting investigated, too, but justice shouldn't depend on who you are.
- deleted 13y ago[deleted]
- jamesaguilar 13y agoI don't know if you remember, but many heads of banks were brought before congress to answer for the financial crisis. But it just turned out that many of them had not done anything illegal (or at least, not provably so).
- dredmorbius 13y agoCongress doesn't have prosecutorial powers against citizens (it has power of impeechment against select government officials). You can be held in contempt for failure to appear, but you cannot be convicted on the basis of what is said, absent action by the courts.
- jacalata 13y agoHave you not heard the phrase "too big to fail?" Unfortunately for mt gox, nobody with power relies on it continuing to exist, but they do rely on the continuing existence of a banking system in the US.
- alexeisadeski3 13y agoThere's not a whole lot of political will to prosecute the consumers who lied on their mortgage forms, so I doubt it'll ever be acted upon.
- rodgerd 13y agoThey were cheerfully going after targets, until it turned out that the public are easy to convince that effective prosecuters should lose their jobs if they visit sex workers. The fact the current top comment in this thread is someone slagging off a prosecuter for going after insder traders demonstrates that HN's as dumb an audience as the average tabloid reader when it comes to convincing people that enforcing the law against corrupt Wall Street criminals is a bad thing.
- downandout 13y agoBitcoin as a concept would be attacked by governments under even the best of circumstances. I don't know why the major players in it have to be so dumb and/or unscrupulous as to draw this level of negative attention to it. As for Mt. Gox itself, its principle(s) will be aggressively prosecuted and sentenced. The New York US attorney behind the subpoena is Preet Bharara. Preet is responsible for shutting down online poker and obtaining the longest sentence for insider trading ever handed down, among other such dubious "accomplishments". He has never met a camera he didn't love, and will take the opportunity to thrash not just Mt Gox but also Bitcoin itself in the media.
- dopamean 13y agoThis is the most accurate characterisation of Preet Bharara that I've ever read.
- sliverstorm 13y agoWhy are they dumb and/or unscrupulous? I would hazard that the bright, somewhat-more-scrupulous minds are busy making it big elsewhere. Perhaps traditional finance.
- jnbiche 13y ago>I would hazard that the bright, somewhat-more-scrupulous minds are busy making it big elsewhere. Perhaps traditional finance. Yes, because we all know how scrupulous traditional finance is.
- sliverstorm 13y agoI don't mean to say traditional finance is totally scrupulous. But I consider schemes to make money within the law to be generally more scrupulous than cut-and-dried theft.
- dobbsbob 13y agoMaybe he can use php to roll his own lawyer. The article says it was served "this month" so I think they are being called to answer for the $10 million or so tied up in seized US accounts earlier and not because they assclowned away 744,000 bitcoins
- captainchaos 13y agoOk, at the risk of sounding completely naive... I've been following this story for a while, and it seems that no one can say for sure if this is embezzlement or gross incompetence. Based on leaked memos it seems to be most people are learning towards the latter, but I'm curious if there's any evidence either way. Based on the claimed transparency of Bitcoin, I would have expected embezzlement on this scale to have been noticed earlier, or at the very least have people be able to follow the Bitcoin trail to determine what is actually happening. Am I wrong or just missing something?
- wpietri 13y agoI don't think anybody yet knows. Note that it could also be negligence and fraud. For example, they might have discovered the losses early but hushed them up in hopes of making it up later. That's a classic way massive financial issues happen. However, the transparency of Bitcoin only helps if it's used that way. There have been proposals to develop approaches so that anybody can externally verify an exchange or "bank". But as far as I know, MtGox hasn't released enough information for other people to verify their story.
- rwallace 13y agoMy gut feeling, speaking as an outsider reading the news, is Karpeles was never dishonest, just hopelessly out of his depth and too stubborn to ask for help. In the normal course of events I also would expect money disappearing over that long a timescale to have to have been embezzlement by an employee, and I would certainly consider that a plausible hypothesis here. On the other hand, reading the IRC chat transcript where Karpeles talks about how he's been under so much stress that it's ruining his health, it's obvious he made the classic mistake of trying to work so many hours he couldn't think straight. So I'm guessing either he delegated the accounts to someone with no oversight and it was an inside job... or he refused to delegate, which meant the accounts were in the hands of someone too tired to be capable of coherent thought, which amounted to the same result as nobody looking at them, and an outside job would suffice. Moral of this story for customers: don't risk money you can't afford to lose. Moral of this story for founders: don't try to be a hero and do more than one job's worth of work, especially in a domain where a screwup may cause significant harm.
- thinkcomp 13y agoI'm not a lawyer, but what's likely to happen here is the following: Soon, Mark Karpeles and/or Tibanne Kabushiki Kaisha and/or Mutum Sigillum LLC are likely to be charged with at least one violation of 18 U.S.C. § 1960 for not having a money transmission license in any state. Even though Karpeles broke state laws, it's a federal crime by extension. He may be extradited from wherever he is to the U.S. to stand trial in federal court. What's interesting is that Coinbase, BitPay, Dwolla and every other current/former Bitcoin exchange company is in the exact same boat legally speaking, and yet people still trust them because of deliberately misleading statements they've made on a regular basis, such as last night's joint announcement. None of them are operating legally, whatever they may say. But mostly they don't say, because my company is already suing two of the three over this very fact. Many of them can be linked to Mt. Gox; Dwolla has already stopped dealing with Bitcoin as a result of NY DFS's subpoenas to the best of my knowledge; US DHS also investigated Mutum Sigillum LLC and froze its assets. The irony is that Mt. Gox is most likely in Japan in the first place because of the insane state regulatory structure in the U.S. So our state MTLs push entrepreneurs out, leave consumers high and dry, and make crashes of the sort we're witnessing now more likely. We need a federal regulatory regime; it's a shame that the other entrepreneurs and investors affected--including the ones who run this site--are too cowardly to come out and say it publicly as I have. There's only one exception: Greg Kidd, who is invested in a number of payment companies, including Coinbase, and now works for Ripple. http://fedpaymentsimprovement.org/wp-content/uploads/Greg_Kidd-Ripple_Labs-120813.pdf http://fedpaymentsimprovement.org/wp-content/uploads/Greg_Ki... Here's my suggestions for what should happen now: http://www.thinkcomputer.com/20140214.cfpbcomment.pdf http://www.thinkcomputer.com/20140214.cfpbcomment.pdf
- mschuster91 13y agoMtGox has a FinCEN MSB license (http://bitcoinmagazine.com/5560/mtgox-gets-fincen-msb-license/ http://bitcoinmagazine.com/5560/mtgox-gets-fincen-msb-licens...).
- thinkcomp 13y agoThere's no such thing. FinCEN does not issue licenses, it just processes MSB registrations. The Bank Secrecy Act (BSA) requires FinCEN registration and SAR report filing; 18 U.S.C. § 1960 requires state licenses. The fact that Mt. Gox knew it had to comply with BSA requirements means that it should have also been aware that it needed state licenses.
- einhverfr 13y agoWell yeah.... Keep in mind this means nothing other than that a crime is being investigated. We know a crime took place. It's a good thing it is being investigated. What we don't know is what crimes are being investigated and the article doesn't provide any of that information.
- negamax 13y agoThis month. There's no date. Let's not relate it to recent events. Actually this kind of insinuates what's happening.
- geuis 13y agoStop linking to paywall sites, please.
- tomelders 13y agoIf a bank lost everyones money, we would expect governments to subpoena them. This is news like "Sun rises for 1.6425 × 10^13th time in a row" is a headline.
- mcv 13y agoThe news here is that bitcoin is apparently considered to be money by this prosecutor. Or at least close enough to it.
- captainmuon 13y agoIf the government really wants to kill bitcoin, its a bit surprizing that they are pursuing this legally. Instead they should make it such that people cannot sue for their losses. They should define legally that bitcoin is neither money nor commodity, that it is of zero value, and that this is so obvious that it is impossible to commit fraud with it. It's your own fault if you pay money for something such obviously fraudulent. (Not that this is my opinion!) If customers would not be able to raise claims, and frauds would get away with impunity, this would quickly destroy any honest businesses in bitcoin, and reduce it to a fringe phenomenon some people use to buy drugs anonymously. I'm guessing the government really doesn't want to do that, because while it would reduce bitcoin to the underground, it would become even more uncontrolable. Rather, they'll try to canalize it through the existing banking system. Its already hard now to buy bitcoins anonymously, and it will probably become harder.
- theklub 13y agoI can't help but feel like at this point in time buying Bitcoin and helping sustain the price is making criminals rich.