Today has brought the moment majority of the Bitcoin community having been expecting for a long time now. We wrote an article recently about MtGox freezing withdrawals and taking their site offline but today they have publicly filed for bankruptcy and admitted they had lost 850,000 Bitcoins and around $65M USD.
The French CEO of MtGox, Mark Karpeles, said in the announcement in front of Japanese media, "First of all, I'm very sorry. The Bitcoin industry is healthy and it is growing. It will continue, and reducing the impact is the most important point."
Mark blamed the Bitcoin malleability bug for the majority of the losses but the Bitcoin community definitely have a different opinion of the situation.
In the past few days, numerous people have decided to look further into Gox's assets in their own time to see exactly what had gone to cause the collapse in the exchange. The results of the research have left many people confused and left with no choice but to question the exchange.
An IRC log posted on Pastebin on June 23rd 2011 there is an insight to some of the 'missing coins'. Here is an important snippet from the logs;
The above transaction shows that Gox, at least at one point in time, had a large sum of Bitcoins.
Digging further into the transactions we can see that a few weeks later the large amount of Bitcoins are broken into a smaller amount and placed into two address as seen below;
We can only assume as this point that this address also belongs to Gox.
A short time after this, a transaction occurred which broke the large amount of Bitcoins into wallets, each containing 50,000. We don't know the exact reasoning for this but we can presume they were possibly being moved into cold storage separately.
2 months after this, a transaction occurs from within the addresses that still are connected to Gox which transfer batches of 50,000 into a larger sum of 500,000 apart from 1 address which still contained 50,000 which can be seen below;
If we follow the 500,000 Bitcoin wallet, we can see that they make a large transaction of nearly all of the coins are made and sent to a wallet publicly belonging to Gox on the Blockchain as seen below. This can only prove our theory that Gox had been in control of the coins the whole time.
The 50,000 address we mentioned earlier then split the coins into a batch of 40,000 and a batch of 10,000. This wallet also was under the control of Gox and the 40,000 Bitcoin address still remains there, untouched, since 2011.
When the wallets had combined to sent the 500,000 + 50,000, there was a wallet which wasn't included and this wallet, to this day, still has 50,000 Bitcoins in the wallet which are unspent.
We can see that all of the mentioned addresses clearly belong to Gox and after slightly digging through them we can see they have 90,000 Bitcoins which have been there since 2011. I'm sure if we dug further and investigated more we would be able to find much more Bitcoins.
This raises the question, who is lying?
In the Gox leaked crisis plan, it stated they had 2,000 Bitcoins to their name. This means either the document was false, Mark or an employee had lied in the document in an attempt to hide the funds or the firm have lost the private keys for the wallets rendering them nothing more than eye candy.
We are not claiming they didn't lose some coins legitimately to the malleability bug but there is no way that 500,000 coins could have been stolen. Even the planets worst auditor wouldn't have missed such a large amount of Bitcoins disappearing from the companies reserve.
Could this be an attempt to walk away with stashed Bitcoins or has the company been running on lies after finding out their wallets were missing funds and/or they lost the private keys.