Pay the Devil in Bitcoin by Adelstein Jake & Stucky Nathalie

Author:Adelstein, Jake & Stucky, Nathalie
Language: eng
Format: epub
Published: 2017-09-09T16:00:00+00:00

But there came a point when reality couldn’t be ignored any longer. On February 7, 2014, Mt. Gox temporarily halted all withdrawals. The measure was taken due to the theft or disappearance of hundreds of thousands of bitcoins owned by Mt. Gox customers, as well as by Mt. Gox itself.

In a press release three days later, the company said it had suspended withdrawals because of a software flaw that would allow traders to defraud the exchange. However, what really happened was that Karpelès was beginning to confront the fact that a colossal sum was missing. To be precise, he was either just realizing that this had happened or found himself in a position where he had to admit the money wasn’t there—and that it hadn’t been there earlier. Only Mark Karpelès really knows the truth.

The announcement drew the ire of the bitcoin community because the flaw was allegedly well known and others in the business had already accounted for it. Mt. Gox was blaming the software when it should have taken direct responsibility itself. Its excuse reflected badly on the currency.

Jason Maurice, once at WizSec and now a freelance security adviser, believes that Karpelès misjudged the severity of the security issue and didn’t implement a correct fix when it was needed. According to Maurice, it was only in early February 2014 that Karpelès understood the danger of the bug and came up with a proper solution, but by then it was too late. The damage had been done.

“Basically he dismissed a multimillion-dollar bug in his software that any decent software engineer would immediately have realized was a major issue,” Maurice said in our talks with him. “Any other financial institution would have a quality assurance team to find something like that, but for Karpelès it was all up to him.”

In addition to leaking money through the bug, the company might accidentally have been giving it away.

“Essentially, Mt. Gox was a dysfunctional organization,” said someone who once worked for the company.

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